FY 2000 FAA ANNUAL REPORT

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FY 2000 FAA ANNUAL REPORT

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A MES SAGE FROM THE AD MIN IS TRA TOR

I am pleased to present the FY 2000 Annual Report of the Federal

Aviation Administration (FAA). Along with our financial statements,

the report describes our most significant program accomplishments and

performance results — summing up the year’s work of our 49,000 skilled

and dedicated employees. The safety and security of air travelers have

always been our foremost missions. We also have an obligation to

provide the American people with an efficient, technically advanced air

transportation system capable of keeping pace with the growing demand

for aviation services and to do so in a way that achieves the greatest

possible improvement for each dollar spent. 

The summer of 2000 placed our air traffic control system under

enormous strain. Yet, despite the combined impact of bad weather,

airline labor problems, and extremely heavy demand, most of the tens of

millions of airline passengers who flew during this peak period reached

their destinations on schedule. More importantly, everyone of the

hundreds of thousands of flights arrived safely.

Those who were delayed, however, had good reason to complain. As Secretary of Transportation Norman Y.

Mineta told the Congress, “congestion and delay not only waste our time as individuals, they also burden our

businesses and our entire economy with inefficiency and higher costs.” Our top priority in the coming year,

second only to safety, is to work with the Nation’s airlines and airports to find better ways to reduce aviation

congestion and delay. For our part, we will continue to make our procedures more efficient, modernize our

technology, and support efforts to expand airport capacity. 

Let me briefly describe some of our activities this past year.

Our Spring/Summer 2000 Plan, announced last March, signaled a new working partnership between

Government and the private sector. For the first time, FAA and the airlines actively collaborated in the

real-time management of our airspace during the severe weather season.

We are finding ways to use our airspace more efficiently, pinpointing the “choke points” or bottlenecks in the

system. This information led to 21 changes in procedures that will produce immediate benefits. Longer term,

the total redesign of the national airspace, that is now ongoing, will help us to avoid gridlock in the next decade

as we expect to see a 35-percent increase in commercial airline flights and a 21-percent gain in general aviation

activity. Airspace redesign east of the Mississippi River should start to ease congestion within t he next 5 years. 

We have made real progress in modernizing our air traffic control system. Air route traffic control centers,

nationwide, are now fully upgraded, and we have already seen a 50-percent reduction in delays due to

equipment failure. Work is proceeding now to upgrade technology in the terminal environment–evidence that

our “test, build, deploy” strategy is successful in maintaining momentum in the push toward modernization.

The introduction of Free Flight technology is making a measurable contribution. Limited deployment under

Phase 1 has already produced a 5-percent increase in the arrival rate at Dallas/Fort Worth. Phase 2, announced

in May 2000, will introduce other state-of-the-art capabilities. Progress in modernization has reinforced our

belief that enhanced safety and increased efficiency are not competing priorities. As goals, they are fully

compatible. 

Expanding airport capacity, the third critical element in our coordinated effort to keep pace with aviation

growth, became more viable with the passage this year of AIR 21–the Wendell H. Ford Aviation Investment and

Reform Act for the 21st Century. AIR 21 addresses the capital needs of airports through an enlarged Airport

Improvement Program (AIP), higher levels of passenger facility charges (PFC), and increased funding for air
FY 2000 FAA ANNUAL REPORT

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traffic control modernization. By authorizing AIP funding for 3 years, this bill also provides the stability we

need for long-term planning. 

FAA’s overall performance is being judged, to a considerable degree, on how well we deal with the problem of

delay. This year, we are creating a new performance-based organization within the FAA to manage the

operation of air traffic control services. It will be headed by a chief operating officer who will be hired through a

nationwide competitive search. Overseeing the new organization is a five-member subcommittee of the FAA’s

Aviation Management Advisory Council that will function as a board of directors. This move introduces higher

standards of accountability at the same time that it provides the requisite managerial resources to raise the

level of performance significantly in the core business of the FAA. The establishment of this new organization is

a major step toward development of a 21st century aviation system.

As we remain flexible in adapting to changing conditions, continue to modernize our technological base, and

seize every opportunity to expand airport infrastructure, I am confident the FAA is well positioned to cope, not

only with the problem of delay, but with whatever challenges may confront us in the coming year. 

Jane F. Garvey

Ad min is tra tor
FY 2000 FAA ANNUAL REPORT

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Ta ble Of Con tents

Mes sage From The Ad min is tra tor ............................................................................1

In tro duc tion...................................................................................................................5

CHAP TER 1. Man age ment Dis cus sion and Anal y sis...........................................7

Overview......................................................................................................................7

FY 2000 Fi nan cial Highlights ...................................................................................21

FAA Strategic Plan....................................................................................................27

CHAP TER 2. Fi nan cial State ment.........................................................................41

Man age ment Re port of Chief Fi nan cial Of fi cer .......................................................41

Fi nan cial State ment Audit Re port........................................................................ 43

Limi ta tions of the Fi nan cial State ment...................................................................55

Fi nan cial State ment..................................................................................................56

Notes to the Fi nan cial State ment.............................................................................61

Re quired Sup ple men tary In for ma tion.....................................................................82

Glos sary of Ac ro nyms ................................................................................................99

In dex............................................................................................................................103
FY 2000 FAA ANNUAL REPORT

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INTRODUCTION

The FAA Annual Report for FY 2000, prepared inconformity with the Chief Financial Officers Act

of 1990, documents FAA’s recent accomplishments

and financial initiatives. It consists of two chapters.

The first chapter contains a three-part Management

Discussion and Analysis. The first part is an overview 

that includes a statement of the FAA’s mission, a

description of our overall organization, and a brief

review of program accomplishments keyed to FAA’s

major lines of business. The second part contains

financial highlights for FY 2000. The third part

provides a summary of the agency’s strategic goals

and a discussion of our performance in meeting those

goals.

The second chapter presents the FAA’s detailed

financial statements for FY 2000. Opening with a

message from the Chief Financial Officer, it continues 

with the auditor’s report, the financial statements

and notes, and required supplemental information

pertaining to the agency’s stewardship of its

resources and other matters.

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FY 2000 FAA ANNUAL REPORT
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FY 2000 FAA ANNUAL REPORT

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MANAGEMENT DISCUSSION AND ANALYSIS

OVER VIEW

FED ERAL AVI A TION AD MIN IS TRA TION

The Federal Aviation Administration (FAA) is theleading Federal agency responsible for the

safety of civil aviation and for guiding and helping

develop commercial space transportation. FAA traces 

its creation to the enactment of the Air Commerce Act

signed into law in 1926. That act established the

framework for the safe and orderly growth of civil

aviation and the management of the Nation’s

airways. 

Today, the United States air transportation system is, 

by far, the busiest and most complex in the world. 

U.S. commercial airlines carry approximately

50 percent of the world’s air travelers, and 19 of the

world’s 20 busiest airports are located here. The

Nation’s decade-long economic expansion has

produced a sustained increase in demand for air

traffic control services. Since 1990, the number of

passengers traveling on U.S. commercial airlines has

grown from 500 million to nearly 700 million, and the

number is expected to reach one billion by 2011. 

Air travelers rightly demand that our aviation system

be safe and reliable. FAA’s challenge is to meet – even

exceed – these expectations and to do so in the face of

continuous growth. Meeting this challenge requires

steady progress in enhancing safety, improving

security, and increasing the efficiency of air travel by

modernizing the air traffic control system and

expanding the capacity of the Nation’s airports. 

The activities, performance measures, and financial

statements presented in this annual report provide

information by which Congress and the public can

assess the effective allocation of our resources to

achieve our strategic objectives. The annual report

also serves to highlight those issues that require the

continuing commitment of resources. 

FAA will continue to channel its resources to respond

to calls for higher levels of safety under conditions of

surging growth. We will make further progress in

effectively integrating technological advances as part

of our ongoing modernization. These imperatives are

expressed in the specific goals of the FAA’s Strategic

Plan. One goal, in particular, takes precedence over

all others: by 2007, FAA, in partnership with the

National Aeronautics and Space Administration

(NASA), is committed to reducing the already low

U.S. aviation commercial fatal accident rate by 80

percent from the 1996 level. 

In support of this goal, the FAA Administrator

established the Safer Skies agenda with the aviation

community in 1998. Safer Skies focuses on the

prevention of accidents by addressing recurrent

causes, sharing safety information, and improving

certification and surveillance. 

MIS SION STATE MENT

FAA provides a safe, secure, and efficient global

aerospace system that contributes to national

security and the promotion of U.S. aerospace safety. 

As the leading authority in the international

aerospace community, FAA is responsive to the

dynamic nature of customer needs, economic

conditions, and environmental concerns.

Major activities include:

• operating and maintaining the Nation’s air traffic

control system;

• regulating civil aviation safety and security and

setting certification standards for air carriers,

commercial operators, air agencies, and pilots;

• improving the baseline of aviation security;

FY 2000 FAA ANNUAL REPORT

OVERVIEW -7- CHAP TER 1

Photo by Kev Cook
• modernizing the National Airspace System (NAS)

and speeding the transition to the next generation

of air traffic control technology;

• administering the Airport Improvement Program

(AIP) to improve the infrastructure and expand the

capacity of the Nation’s airports;

• promoting global aviation safety and security in

collaboration with the International Civil Aviation

Organization (ICAO) and other civil aviation

authorities abroad;

• licensing and regulating the U.S. commercial space

transportation industry.

FY 2000 FAA ANNUAL REPORT

OVERVIEW -8- CHAP TER 1

FAA HEADQUARTERS FIELD ORGANIZATIONS

Associate Administrator for Regulation and

Certification

(AVR)

Assistant Administrator for Regional and Center

Operations

(ARC)

Associate Administrator for Civil Aviation Security

(ACS)

Alaskan Region

(AAL)

Associate Administrator for Air Traffic Services

(ATS)

Central Region

(ACE)

Associate Administrator for Research and

Acquisitions

(ARA)

Eastern Region

(AEA)

Associate Administrator for Airports

(ARP)

Great Lakes Region

(AGL)

Associate Administrator for Commercial

Space Transportation

(AST)

New England Region

(ANE)

Office of the Chief Counsel

(AGC)

Northwest Mountain Region

(ANM)

Office of Civil Rights

(ACR)

Southern Region

(ASO)

Office of Government and Industry Affairs

(AGI)

Southwest Region

(ASW)

Office of System Safety

(ASY)

Western-Pacific Region

(AWP)

Office of Public Affairs

(APA)

Mike Monroney Aeronautical Center

(MMAC)

Assistant Administrator for Information Services/CIO

(AIO)

William J. Hughes Technical Center

(ACT)

Free Flight Program Office

(AOZ)

Assistant Administrator for Policy, Planning, and

International Aviation

(API)

Assistant Administrator for Human Resource

Management

(AHR)

Assistant Administrator for Financial Services

(ABA)

FAA HEAD QUAR TERS AND FIELD OR GANI ZA TION
OR GA NI ZA TION

The FAA is headed by an Administrator who is

assisted by a Deputy Administrator. Reporting to the

Administrator are six Associate Administrators who

direct the principal functions that support the

agency’s mission. Also reporting to the Administrator 

are the Chief Counsel, nine Assistant Administrators, 

and one office director responsible for other key

programs. FAA’s field organizations – where more

than 90 percent of all FAA employees work – are

concentrated in nine geographical regions and two

major centers, the Mike Monroney Aeronautical

Center and the William J. Hughes Technical

Center. Together, the FAA team of over 49,000

employees administers the world’s busiest and

safest civil aviation system. 

FAA is one of 10 operating arms of the Department

of Transportation (DOT) and is a full partner in the 

ONE DOT Management Strategy – a program that 

emphasizes collaboration among departmental

branches. 

FY 2000 AC TIV ITY HIGH LIGHTS

Safety Regulation and Certification

FAA aviation safety inspectors and technical staff

oversee the safety of planes and the credentials

FY 2000 FAA ANNUAL REPORT

OVERVIEW -9- CHAP TER 1

FAA Employment

(Permanent Employees)

Staff Offices

8%

Research and

Acquisitions

4%

Airports

1%

Regulation

and

Certification

12%

Civil Aviation

Security

2%

Commercial

Space

Transportation

0%

Air Traffic

Services

73%
and competency of pilots and mechanics, develop

mandatory safety rules, and set the standards that

ensure safety in the skies. FAA also evaluates

foreign governments’ oversight of their airlines

serving U.S. airports and releases the results on its 

Web site (www.faa.gov/avr/iasa/index.htm) so that the

public can know which countries meet international

safety standards. FAA streamlined this program in

May 2000 to make it easier for consumers to

understand the rating categories. 

• Partnership to Increase Aviation Safety. In

January 2000, President Clinton announced the

implementation of the Aviation Safety Action

Program (ASAP), a key Safer Skies initiative

designed to encourage better reporting of safety

concerns by aviation employees. ASAP will give

FAA and airlines an important new source of

information to prevent safety incidents and will

help meet the Administration’s goal of reducing the

U.S. commercial aviation fatal accident rate by

80 percent by 2007. ASAP has three important

features. It will (1) provide new sources of safety

data, (2) create new incentives to report safety

problems, and (3) heighten ability to reduce

accidents and track problem areas. 

• Improved Airline Inspection. The Air Transportation

Oversight System (ATOS), announced in October

1998, is in place for the Nation’s 10 largest airlines –

those handling 95 percent of all U.S. passengers – and

will ultimately include all U.S. airlines. ATOS will

improve how the FAA oversees and inspects

airlines. It is designed to identify safety trends in

order to spot and correct problems at their root

cause before an accident occurs. Feedback from the

principal inspectors of the 10 air carriers and others 

has resulted in a number of improvements since the 

program was begun. New, enhanced system safety

and risk identification training has been developed, 

and ATOS policies and procedures are being

revised based on lessons learned. Followup

training was provided in FY 2000 for the 511

inspectors currently conducting ATOS

surveillance. In July 2000, FAA began a special

review of ATOS. The review will recommend where 

and how to improve and accelerate ATOS

development and implementation. 

• Airline Safety Data. On June 30, 2000, FAA

proposed a rule to give the FAA access to key safety

data from every U.S. airline participating in the

Flight Operational Quality Assurance (FOQA)

program. FOQA uses state-of-the-art flight data

recorders to collect and analyze data on routine

flights. FAA plans to use this information to

identify aviation safety trends and target potential

problems. Eight airlines have FOQA programs,

one has FAA approval pending, and five others say

they plan to initiate programs in the future. 

• Terrain Awareness and Warning System (TAWS).

A final rule was issued in March 2000 that requires

the installation and use of TAWS equipment on

turbine-powered airplanes with six or more

passenger seats. The TAWS rule is aimed at

eliminating accidents or incidents in which the

airplane, under the flightcrew’s control, is

inadvertently flown into terrain, obstacles, or water. 

The TAWS requirement is a major component of the

Administrator’s Safer Skies agenda.

• FAA/Boeing 737 Rudder Initiatives. Following a

year long, top-to-bottom analysis, FAA announced

on September 14, 2000, near-term and long-term

initiatives regarding the Boeing 737 rudder

system. Long-term, the FAA will initiate

rulemaking to mandate a redesign of the Boeing

737 rudder system. The redesign will increase the

overall safety of the 737 by simplifying and

enhancing the rudder system and eliminate known

failure possibilities. Redesign and retrofitting of a

modified rudder system on the entire 737 fleet will

take several years. Boeing will have to develop and

thoroughly test the new design and make sure its

installation will not have unintended negative

safety consequences. Near-term initiatives involve

changes in operations and maintenance. On

October 26, 2000, FAA issued an airworthiness

directive (AD) that mandated a simplified

FY 2000 FAA ANNUAL REPORT

OVER VIEW -10- CHAP TER 1

FAA aviation safety inspectors perform more than 275 thousand 

inspections and audits each year, helping make air travel

among the safest modes of transportation.
procedure to be used in the event of a jammed or

restricted rudder and initiated associated training. 

Boeing and the FAA are reviewing and revising the

maintenance program. If significant changes are

identified, rulemaking to mandate the

maintenance will be mandated in 2001.

• FAA Flight Data Link. General aviation aircraft

are now able to get cockpit displays of digital

weather graphics and text through an

FAA-sponsored service inaugurated in July. The

Flight Information Service Data Link (FISDL)

service is offered without charge but requires a

special cockpit display. Other text and graphic

information is available through subscription.

FISDL is a Government-industry partnership with

Arnav Systems and Honeywell International.

• Modified GE CF6 Engines Inspection Times.

Inspections of General Electric CF-6 engines will be 

performed on a more restricted schedule following

an FAA AD issued in August 2000. The inspections

are being done to detect cracking in the

high-pressure compressor stage (3-9 spool) that

could cause an uncontained engine failure. The

compressor in an aircraft engine compresses the

incoming air and speeds it up before it enters the

combustion chamber to mix with fuel. The

accelerated inspections were ordered following an

uncontained engine failure experienced by a Varig

Brasil Airlines Boeing 767 in June 2000. There are

about 1,180 CF-6 engines in the U. S. fleet,

approximately 1400 worldwide.

• Insulation Replacement Rules Finalized. A final

rule issued on May 25, 2000, requires operators of

719 Boeing MD-80, MD-88, MD-90, DC-10, and

MD-11 aircraft to replace insulation blankets

covered with metalized Mylar. The agency

proposed the rule in August 1999 to minimize the

risk of fire spreading aboard these types of aircraft. 

Replacement materials must meet a new flame

propagation standard based on an American

Society for Testing and Materials flammability

standard. FAA developed the new test standard

with input from world-renowned fire experts. 

• Thermal Acoustic Insulation Rulemaking. Notice

of Proposed Rulemaking (NPRM) 00-09 was issued

on September 8, 2000, to incorporate the new flame

propagation standard into the regulations for new

transport category airplanes. Newly type

certificated airplanes and newly manufactured

airplanes entering service under any of the

operating parts 3 years after the effective date of

the regulation would be required to comply. NPRM

00-09 also proposed a new standard for burn

through resistance of thermal acoustic insulation,

which would apply to newly type certificated

airplanes and newly manufactured airplanes

entering Part 121 service 4 years after the effective

date of the regulation.

• Transport Airplane Fuel Tank Safety. On October 26, 1999,

FAA proposed rulemaking that would require

increasing fuel tank safety. It proposed a Special

Federal Aviation Regulation (FAR) that would

require a design review to show that the design of

existing airplane designs precludes ignition

sources in fuel tanks; operational rules that would

require mandatory fuel tank system maintenance

actions; and a design rule that would, for the first

time in civil aviation, require that new airplane

designs minimize the exposure of fuel tanks to

flammable vapors. In a separate action, on July 10,

2000, FAA tasked the Aviation Rulemaking

Advisory Committee (ARAC) to provide

recommendations to the FAA on future rulemaking 

that would reduce the acceptable level of fuel tank

flammability to the lower levels that could be

obtained using fuel tank inerting. The ARAC report is

due by July 14, 2001, and will address rulemaking for

existing inservice airplanes, newly manufactured

airplanes, and new type design airplanes.

• Aging Transport NonStructural Systems. In

response to a report from the White House

Commission for Aviation Safety and Security, FAA

Administrator Garvey established the Aging

Transport Systems Rulemaking Advisory Committee 

(ATSRAC). ATSRAC was specifically chartered to:

(1) review service histories, service bulletins, and

service letters for the aging transport fleet which

pertain to aging systems for possible mandatory

action and provide recommendations to the FAA; (2) to

conduct evaluations of inservice transport airplane

models; (3) to provide recommendations to the FAA for

improvements to airplane maintenance to better

address aging airplane systems, including the

study of inspection criteria for systems; and (4) to

propose revisions to the FAR’s and associated

guidance material as may be appropriate to

institutionalize the lessons learned from the aging

systems program.

The work of ATSRAC and the FAA has yielded

sig nif i cant ben e fits. Fleet in spec tions are

FY 2000 FAA ANNUAL REPORT

OVER VIEW -11- CHAP TER 1
com pleted, and a re port on the find ings of the

nonintrusive in spec tions on 81 air craft has been

pub lished. In ad di tion to the fleet in spec tions

per formed un der the nonintrusive in spec tion

pro gram, a re view of ag ing air plane ser vice his tory

was per formed. The in tru sive in spec tions of six

ag ing air craft are com plete. The re sult of these

in spec tions has shown that there are no im me di ate

safety prob lems, but there may be some fol low-on

cor rec tive ac tions. Im prove ments are needed in

main te nance and de sign prac tices. The ma jor

air lines that com prise the Air Trans port

As so ci a tion of Amer ica have al ready taken steps to

im prove their own main te nance prac tices with

re spect to wir ing by adopt ing Wiring Prac tices

Guide lines. Through the work of the FAA and

ATSRAC, aware ness has been raised both

do mes ti cally and in ter na tion ally, with re spect to

wir ing best prac tices and wir ing safety. FAA is also

work ing to de velop train ing for its en gi neers and

in spec tors, de vel op ing a new wire sys tem re port ing

code plus a pro cess for re port ing wire sys tems

prob lems and is lead ing the way in re search and

de vel op ment with re gard to ag ing sys tems.

• Heart Device Proposal. President Clinton

announced a proposed rule in May that would

require U.S. airlines to carry automatic external

defibrillators and other medications on all U.S.

domestic and international flights. Eight major

and six regional airlines either currently carry or

have made a commitment to carry the heart device,

which can help save lives of airline passengers who

suffer cardiac arrest in flight. 

Civil Aviation Security

FAA works with local security, intelligence, and law

enforcement agencies to protect passengers,

personnel, aircraft, airports, and critical national

airspace facilities against terrorist and other criminal 

acts. Threats are monitored continuously and, when

necessary, the FAA orders heightened precautions. 

Internationally, FAA assesses the effectiveness of

security measures both at foreign airports served by

U.S. carriers and also at airports that are a last point

of departure by foreign air carriers for service into the

United States. Currently, the Foreign Airport

Assessment Program covers 240 airports in over 100

countries. 

Preventing security incidents in the aviation system

requires constant vigilance. Areas of focus include

improving the training, performance, and retention of 

airport screeners; improving cargo security

standards; deploying advanced security technology;

strengthening security through consortia and

partnerships with airport, airline, and law

enforcement personnel; conducting unannounced,

realistic operational tests of security systems;

enhancing controls on access and movement in secure

areas of airports; and safeguarding FAA personnel

and the critical infrastructure support of the NAS. 

• Certification of Screening Companies. On January 5, 2000,

FAA proposed a rule that would require agency

certification for companies hired by the airlines to

perform security screening at airports. The rule

would set standards for companies providing

security screening, strengthen training and testing 

standards for screeners, and impose more stringent

experience and training requirements on screening

company managers and instructors. 

• Advanced Security Technology. Subsequent to the

initial release of the report of the White House

Commission on Aviation Safety and Security in

1996, the deployment of advanced technology

equipment for screening checked baggage at the

Nation’s airports has been a top priority of the

Clinton Administration as well as the Congress. 

The scope of the FAA’s efforts to improve civil

aviation security has focused on the deployment of

explosives detection systems (EDS), explosives

trace detection (ETD) devices, and advanced x-ray

equipment (TRX) capable of projecting threat

images to improve screener training and

proficiency. The effort also includes deployment of

mission-support elements that include

screener-assist technologies and computer-based

training aids.

FY 2000 FAA ANNUAL REPORT

OVER VIEW -12- CHAP TER 1

Screeners play a vital role in aviation security by detecting

dangerous objects and keeping those objects from being brought

on board passenger planes.
By the end of FY 2000, the FAA had installed 133

EDS’s (including 21 advanced technology units) for

screening checked baggage, 665 ETD units for

screening carry-on, checked baggage, and 186 TRX

units at over 130 airports. The FAA expects to

extend the deployment program to over 400

airports across the country. 

During FY 2000, FAA awarded contracts worth up

to $50 million to three vendors for the purchase of

up to 210 ETD units from each manufacturer. The

FAA also signed contracts for the purchase of up to

60 units from a second manufacturer of EDS

equipment.

As the deployment program expands to airports or

air carrier stations with lower passenger activity,

the FAA is sponsoring the development of more cost 

effective screening systems which provide

equivalent detection capability but at a lower cost

for initial purchase and operations. In addition, its

size and throughput will be better matched at

airports with reduced terminal space and

passenger volume. FAA has awarded grants

totaling $8.6 million to develop prototypes of these

lower cost EDS’s.

• FAA/United Kingdom Memorandum of Cooperation.

The FAA and the Civil Aviation Authority (CAA) of

the United Kingdom agreed in September to work

together to promote dangerous goods inspections

and enforcement. The two countries will work

together to investigate incidents and also agreed to

share reports, documents, and other safety-related

information.

• Civil Aviation Security Consortia. Voluntary

consortia have been established at U.S. airports to

identify, discuss, and solve security problems at the

local levels. Consortia members include airport

operators, airlines, local law enforcement, airport

tenants, FAA security agents, and other

Government officials. 

• Information System Security. FAA is

strengthening its safeguards against unauthorized

access to its facilities and information. Risk

assessments were conducted for mission critical

systems, and 102 contracts were modified to

tighten security procedures. Contracts related to

nonmission critical systems will undergo similar risk

assessments and revisions. These precautions were

taken in parallel with the imposition of stricter

security standards at FAA facilities. By the end of

FY 2000, 450 facilities had been assessed and 66

accredited as meeting the new, tougher requirements.

Global Avi a tion In for ma tion Net work (GAIN) 

Representatives from 20 government agencies met at

the Fourth Global Aviation Information Network

(GAIN) World Conference in June 2000, hosted by

Airbus Industrie and Air France. The conference

addressed issues related to collecting and sharing

safety information, showcased analytical tools that

are being used by airlines to extract useful

information from large quantities of safety data, and

demonstrated two prototype systems that can

exchange airline safety event reports securely in near

real time. GAIN was proposed by the FAA in 1996 as

a way to promote and facilitate the voluntary

collection and sharing of safety information among

users in the international aviation community. 

Within FAA, the Office of System Safety is the focal

point for the GAIN initiative. 

Air Traffic Services

From the time pilots begin pre-flight activities until

they shut down the aircraft at their destination, air

traffic controllers provide an integrated set of services 

to ensure that each aircraft operation is safe. 

Controllers at local airport towers direct airplanes

that are taking off, landing, or flying within the visual

range of their tower – usually about 5 miles. 

Controllers in terminal radar approach control

(TRACON) facilities handle aircraft for one or more

airports in a large metropolitan area, generally

within 30 to 40 miles of the area’s major airport. 

Controllers at 21 air route traffic control centers

(ARTCC) guide airplanes in flight from one city to

another. Traffic management specialists at the David J.

Hurley Air Traffic Control Systems Command Center

FY 2000 FAA ANNUAL REPORT

OVER VIEW -13- CHAP TER 1

Controllers in airport traffic control towers keep aircraft safely

separated as they take off, land, and move along runways and

taxiways.
FY 2000 FAA ANNUAL REPORT

OVER VIEW -14- CHAP TER 1

(ATCSCC) in Herndon, Virginia, plan and balance the 

flow of air traffic, nationwide, to maximize safety and

minimize delays and congestion. Flight service

stations (FSS) provide flight plan filing, weather data, 

and information briefings to pilots. They rely on a

complex network of radar, computer, and

communications systems that are kept operating at

peak efficiency by highly trained electronics and

environmental technicians.

• Reducing Delays. FAA and the airlines began

working in the fall of 1999 to develop a new

approach to managing operations during severe

weather conditions. The “Spring/Summer 2000

Plan” announced by President Clinton on

March 10, 2000, maximizes the use of available

airspace, improves communications between FAA

and the airline industry, and expands the use of

new technology to help reduce delays.

Operational use of a new tool designed to help reduce 

delays at major airports in the northeastern part of

the United States was announced May 31, 2000.

The departure spacing program (DSP) is a

coordination and planning tool that enables air

traffic controllers to work more efficiently with

traffic management coordinators to better use

existing capacity for departing aircraft. Using

DSP, controllers can coordinate rerouting to avoid

severe weather and reduce the need for voice

communication between air traffic control facilities

by providing flight plan information and reports. 

The tool has been in use at LaGuardia, Kennedy,

Newark, and Philadelphia airport towers and in

radar control facilities in the New York area since

April 2000. In the future, this program will be

expanded to allow the FAA ATCSCC in Herndon,

Virginia, to facilitate the flow of traffic into and out

of all the northeast U.S. airports to maximize use of

available airspace. 

FAA has launched a special Web site,

www.fly.faa.gov, to provide the latest information

about delays at U.S. airports. 

• Enhancing Runway Safety. FAA is collaborating

with industry to increase awareness of runway

safety – through education and training of pilots,

controllers, and ground vehicle operations – and

through technology. Outreach efforts during FY 2000

included a series of workshops held around the

country to produce regional and local plans to

reduce runway incursions, a runway safety human

factors symposium, and a National Summit

convened in Washington on June 26-28, 2000. 

FAA announced at the summit that it will buy a

new low-cost ground surveillance system, called

ASDE-X, for installation at 25 mid-size and smaller 

airports. The new airport surface detection

equipment will provide detailed coverage of runways

and taxiways at an airport and also alert air traffic

controllers in the tower to impending collisions. 

Testing of the Airport Movement Area Safety

System (AMASS) – a computerized enhancement

to the current airport ground radar that warns

controllers visually and aurally of incursions that

might lead to collisions – began at San Francisco in

September and at Detroit in October 2000. Since

undergoing a major program reevaluation in

FY 1999, AMASS has met or exceeded each

deadline in its revised schedule. With successful

testing, commissioning at 34 airports should begin

in 2001. 

FAA is also evaluating other tools that have potential

to enhance runway safety, such as GPS-based

automatic dependent surveillance-broadcast

(ADS-B) technology. ADS-B provides precise

position information reports from aircraft and

ground vehicles to the air traffic control tower and

to other aircraft equipped with this technology. 

On September 25, 2000, FAA issued a Broad

Agency Announcement requesting demonstrations

of any new or emerging technology that could

increase safety at U.S. airports. 

Free Flight

Free Flight is a new air traffic management concept

that will ultimately allow pilots operating under

instrument flight rules greater freedom to select their

path and speed in real time. In Free Flight Phase 1

(FFP1), FAA will deploy five “core capability”

production quality systems to selected sites by the end 

of 2002: 

• User Request Evaluation Tool (URET). This

decision support tool contains an automated

conflict probe that enables controllers to manage

user requests in en route airspace by identifying

potential conflicts. It is able to predict loss of

aircraft-to-aircraft separation up to 20 minutes

ahead and aircraft-to-airspace up to 40 minutes

ahead. URET core capabilities limited deployment

is planned at seven centers. URET CCLD has

accumulated over 500,000 hours of daily use at

Memphis and Indianapolis Centers and has saved
airlines an estimated $1 million per month in fuel

costs.

• Traffic Management Advisor (TMA). Under FFP1,

eight centers will be equipped with TMA – a flow

control tool that aids the en route controller and

traffic managers in making efficient decisions

regarding the metering, sequencing, and spacing of

en route arrival aircraft. Three centers, Denver,

Minneapolis, and Fort Worth, are now using TMA

on a daily basis. Los Angeles Center expects to

achieve initial daily use in November 2000. Fort

Worth Center reports that using TMA has

increased its aircraft acceptance rate by 5 percent.

• Passive Final Approach Spacing Tool (pFAST).

This automation tool aids the terminal controller in

making efficient decisions regarding the

sequencing and runway assignment of terminal

arrival aircraft. In February 2000, pFAST was

placed in daily use at the Dallas/Fort Worth

TRACON for the airport’s south operation where it

has helped boost capacity by adding eight or more

takeoffs/landings per “rush.” Under FFP1, pFAST

will be deployed to five TRACON’s.

• Surface Movement Advisor (SMA). This tool

facilitates the sharing of aircraft arrival

information to airlines to augment decisionmaking

regarding the surface movement of aircraft. Since

its deployment in December 1999, SMA has avoided 

3-5 costly diversions per week during inclement

weather. 

• Collaborative Decision Making (CDM). These tools

provide airline operations centers and the FAA

with real-time access to current NAS status

information and enable them to negotiate directly

on user preferences. A computer-based link was

launched in June 2000 that allows all pilots to

see if normally restricted airspace is available. 

The information can be accessed online at

www.fly.faa.gov/ois/.

Free Flight Phase 2 (FFP2), announced in May 2000,

will introduce new capabilities from 2003 through

2005. FFP2 will (1) oversee the geographic expansion

of FFP1 tools; (2) develop and deploy new capabilities,

including the collaborative routing coordination tool

and controller-pilot data link communications

(CPDLC) technology; and (3) carry out R&D projects

selected for their importance to this specific phase,

such as wake vortex issues, departure integration,

and departure management.

Research and Acquisitions

FAA provides the essential infrastructure and

conducts research to meet increasing demands for

higher levels of system safety, security, capacity, and

efficiency. FAA’s comprehensive modernization plan

has a three-fold purpose: (1) add safety features; (2)

sustain the current system by replacing aging

equipment and renewing the infrastructure; and (3)

increase flight efficiency and flexibility for those

who use our airports and airspace. FAA’s strategic

plan to modernize the NAS, called NAS

Architecture Version 4.0, is now available online at

http://www.nas-architecture.faa.gov.

FAA’s Research, Engineering and Development

(R,E&D) efforts encompass programs that support

the reduction of risks associated with wake vortices,

hazardous weather, and aircraft fatigue and

corrosion; the development of less costly, more

reliable security technologies; and the investigation

of aviation human factors issues.

• Display System Replacement. NAS modernization

reached a significant milestone in July when the last of 

20 new display system replacements (DSR) was

dedicated at the Washington ARTCC – an event

marking the completion of the $1.05 billion

program to replace aging monochrome radar

screens with color displays and an easy-to-use

Windows-type navigating system and modern data

processing technology. 

• Air Route Surveillance Radar. In May 2000, FAA

completed the commissioning of ARSR-4, an air

route surveillance radar that provides better

FY 2000 FAA ANNUAL REPORT

OVER VIEW -15- CHAP TER 1

With DSR, controllers in ARTCC’s have modern tools that can

be upgraded as needed to help deal with the strong growth in air

traffic.
position information and weather detection. The

12-year ARSR-4 program was a joint

FAA/Department of Defense initiative. The new

all-solid-state, long-range, three-dimensional

radar provides aircraft position information to the

FAA, Air Force, Navy, and Customs Service. The

ARSR-4 also provides weather data to both the FAA 

and National Weather Service. The program

consists of 43 operational systems deployed around

the periphery of the continental United States and

in Guam, Hawaii, and Guantanamo Bay, Cuba,

plus a system used for support at the FAA Academy

at the Mike Monroney Aeronautical Center in

Oklahoma City. 

• Standard Terminal Automation Replacement System 

(STARS). The first version of STARS, the next

generation upgrade of air traffic computers, displays,

and software designed for the terminal area, is

running in both El Paso, Texas, and in Syracuse, New

York. A Department of Defense (DOD) version

became operational at Eglin Air Force Base, Florida,

in June 2000.

• Potomac TRACON. Construction of the Potomac

TRACON, a new regional air traffic control facility to

serve the entire Baltimore-Washington area, began in

March 2000. Located at Vint Hill in Fauquier County,

Virginia, the new facility will improve both the safety

and efficiency of air travel in the region. Potomac

TRACON will consolidate terminal radar control

facilities at four airports - Baltimore-Washington

International, Washington-Dulles International,

Reagan Washington National, and Andrews Air Force

Base - into one. Each of the four airports will continue

to be served by its existing control tower. The Potomac

TRACON is planned to be fully operational in May

2002. Combining four separate TRACON’s into one

will reduce operating and maintenance costs by an

estimated $2 million annually.

• Controller-Pilot Data Link Communications

(CPDLC). FAA awarded a contract to Computer

Sciences Corp. (CSC) of Rockville, Maryland, in

February to begin software development and initial 

implementation of CPDLC Build 1A. Data link

supplements verbal communications between

pilots and controllers by transmitting digital

nontime critical information on a separate

frequency. CPDLC 1A will be deployed first at the

Miami ARTCC in June 2003 with national

deployment beginning 6 months later at the other

19 air route traffic control centers in the

continental United States. 

• Satellite-Based Services in the 21st Century.

In February 2000, DOT and DOD jointly released

the 1999 Federal Radionavigation Plan (FRP),

which includes plans for two additional Global

Positioning System (GPS) signals for civil use and a 

revised schedule for making the transition to GPS – 

the guidance system of the 21st century. The 1999

FRP has revised schedules for phasing down most

land-based radionavigation systems to allow more

time to transition to GPS. The plan calls for the

Government to continue operating Loran-C, a

land-based system currently in use, in the short

term while the Administration continues to

evaluate the long-term need for the system. 

• Safe Flight 21. In Alaska and in the Ohio Valley,

new satellite-based communications, navigation,

FY 2000 FAA ANNUAL REPORT

OVER VIEW -16- CHAP TER 1

Controllers at Eglin Air Force Base use the new STARS

equipment to guide live traffic. Deployment at Eglin AFB

enables the FAA to evaluate STARS performance in a

representative operational environment

Controllers at terminal radar approach control facilities provide 

guidance to pilots as they enter and leave the immediate area of

the airport.
and surveillance operational demonstrations are

underway to provide improved situational

awareness for both pilots and controllers.

Technologies include GPS, improved approaches,

ADS-B, and providing flight plan and weather

information via data link. 

In August 2000, over 200 aviation industry officials

viewed a demonstration of FAA’s Capstone “in

cockpit” technology that provides pilots with

enhanced situational awareness. The technology

was unveiled during a conference at the University

of Alaska Anchorage’s aviation complex. Capstone

technology is another tool that pilots can use in

making decisions about when and where to fly. 

Pilots can keep track of other nearby aircraft

equipped with Capstone technology, as well as

receive real-time weather graphics. A terrain

advisory feature is also part of the system. 

Fifty-five aircraft are currently equipped under the

federally funded demonstration program. 

Tests were conducted in Louisville, Kentucky, in

October 2000 to evaluate the use of ADS-B in the

terminal area environment. The tests focused on

ADS-B capabilities in improving approach and

departure spacing as well as two surface situational 

awareness applications. The 3 days of testing were

performed in collaboration with the Cargo Airline

Association as part of the FAA’s Safe Flight 21 Ohio

River Valley trials. 

Airports

FAA provides leadership in planning and developing

a safe and efficient national airport system to satisfy

the needs of aviation interests in the United States. 

As part of its safety oversight mission, FAA certifies

airports serving air carrier aircraft operating with

more than 30 seats and periodically inspects those

airports for compliance with established safety

standards. 

• Grants-in-Aid to Airports. FAA distributes grants

through the Airport Improvement Program (AIP) to 

maintain and enhance airport safety, preserve

existing airport infrastructure, expand capacity

and efficiency throughout the airport system, and

reduce the impact of airport noise on the surrounding

community. The AIP, which receives funds from the

Airport and Airway Trust Fund maintained through

the payment of user taxes, makes it possible to fund

one-fourth to one-third of all capital development at

the Nation’s public use airports.

In FY 2000, FAA’s office of the Associate

Administrator for Airports awarded approximately 

$1.9 billion in new AIP grants-in-aid obligations to

improve and expand the Nation’s airports. New

grants awarded included the following: 

- 596 grants to tal ing $1,416,971,592 for pri mary

air ports;

- 64 grants and $58,995,548 for nonprimary

com mer cial ser vice air ports;

- 99 grants and $111,691,982 for re liever

air ports;

- 346 grants and $224,224,470 for gen eral

avi a tion air ports;

- 29 grants and $11,207,519 for air port sys tem

plan ning; 

- 16 State Block grants val ued at $121,768,854.

Included in the above were 84 grants and

$215,730,348 to achieve noise compatibility for

communities near airports. 

• Passenger Facility Charge (PFC) Program. The

collection of PFC’s, which must be approved by the

FAA, provides an additional source of capital

funding for improving airports. The Wendell H.

Ford Aviation Investment and Reform Act for the

FY 2000 FAA ANNUAL REPORT

OVER VIEW -17- CHAP TER 1

Washington Monument as seen from Reagan National Airport.

Photo courtesy of Metropolitan Washington Aiports Authority
21st Century (AIR-21) signed into law on April 5,

2000, authorized the collection of new $4.00 and

$4.50 PFC levels. Prior to AIR-21, the highest

authorized PFC level was $3.00 per enplaned revenue 

passenger. The uniform industrywide start date for

collection of the new levels is April 1, 2001.

• Military Airport Program (MAP). FAA selected

Cecil Field in Jacksonville, Florida, to be the

twelfth military airbase to be converted to civilian

or joint-use. A former naval air station, Cecil Field

has four runways, including one 12,000 feet in

length. The MAP increases national airport system 

capacity by providing financial assistance for the

redevelopment of former military airfields near

major metropolitan areas. To date, MAP has added

36 runways with a potential capacity of more than

4.9 million annual aircraft operations.

• Environmental Safeguards. Deicing is an essential

procedure for flight safety. Deicing materials can,

however, contaminate nearby land and surface

waters. FAA has been working with NASA and

industry to develop new techniques and materials

for deicing that may reduce environmental

pollution. In August 2000, FAA issued an Advisory

Circular (AC) change that provides standards and

recommendations to build infrared aircraft deicing

facilities. The change also adds anaerobic

bioremediation as an alternative method to

mitigate the runoff effects of de/anti-icing products.

• Wildlife Hazard Management. Most collisions

between aircraft and wildlife occur when the plane

is taking off, climbing, descending, or landing. In

January 2000, FAA published a manual, “Wildlife

Hazard Management at Airports” containing

specific information on the nature of wildlife

strikes, legal authority, regulations, wildlife

management techniques, wildlife hazard

assessments, and sources of help and information. 

• New Airport Design Standards. An AC containing

the standards for the power and control unit for

“land and hold short” lighting systems was issued

in August 2000. A draft AC issued in April

described the standards for the design and

installation of runway and taxiway edge lighting

systems. A revision to the “Guide Specifications for

Devices Used to Board Airline Passengers with

Mobility Impairments,” issued in March 2000,

added standards for ramps.

Commercial Space Transportation

The Office of Commercial Space Transportation

oversees the safety of commercial space launches and

regulates the growing commercial space industry. 

The organization licenses commercial space launches

that take place in the United States or are conducted

by U.S. citizens anywhere in the world. In FY 2000,

FAA officials observed 12 commercial space launches,

including the successful launch on May 24, 2000, of

the first flight of the new Lockheed Martin Atlas III

vehicle carrying the Eutelsat W4 satellite from Cape

Canaveral. In July, FAA officials also observed the

successful firing of a Sea Launch rocket from a

seagoing launch platform sailing near the Equator on

the Pacific Ocean. A previous launch in March failed.

• Reusable Launch Vehicles. In September 2000,

FAA issued a final rule establishing operational

requirements for launches of reusable launch

vehicles (RLV) and the authorized conduct of

commercial space reentry activities. The final

rules fulfill the FAA’s safety mandate by

limiting risk to the public from RLV and reentry

operations. A second final rule authorized the

Associate Administrator for Commercial Space

Transportation to determine financial responsibility 

requirements for licensees authorized to launch and

reenter an RLV. 

• Licensing Regulations. To date, most commercial

launches have occurred principally at Federal

launch ranges under safety procedures developed

by those operators. On October 19, 2000, FAA

issued a final rule that establishes specific

licensing and safety requirements for operating a

launch site, whether that site is located on or off a

Federal launch range. The rules are intended to

enable the development and use of launch sites,

while protecting the public from the risks

associated with activities at those sites. 

• FAA/NASA Cooperative Agreement. In November

1999, FAA and NASA signed a Memorandum of

Understanding that promotes collaborative use of

the two agencies’ cooperative commercial space

research and development activities. In particular, 

research findings will be shared about RLV

technology, maintenance and operations, launch

and reentry site infrastructure, and its integration

into the NAS. Other areas of cooperation will focus

on training and health requirements for crew and

passengers and the environmental effects of space

transportation systems.

FY 2000 FAA ANNUAL REPORT

OVER VIEW -18- CHAP TER 1
FY 2000 FAA ANNUAL REPORT

FAA Administration

FAA strives to make its operations more efficient and

responsive by employing sound business practices,

introducing advanced information technology,

maintaining a highly skilled workforce, and operating 

a model workplace. 

• Unqualified Audit Opinion. FAA received an

unqualified (i.e., “clean”) audit from the DOT Inspector 

General for fiscal year 1999, marking the first time the

FAA has achieved approval of its financial statements

since the audits began in FY 1992. 

• FAA Management Advisory Council. The first

seven members of the FAA Management Advisory

Council were sworn in on September 19, 2000. 

Congress mandated the Council in 1996 to advise

the Administrator on policy, spending, funding,

and regulatory matters affecting the aviation

industry. The Council will consist of 18 members,

10 of whom are appointed by the President to

represent aviation interests. Five members are

appointed by the Secretary and will serve as a

subcommittee focusing on air traffic services. There

also is one designee each from DOT, the DOD, and

an air traffic services union.

• Overflight Fees. An interim final rule went into

effect August 1, 2000, that requires aircraft

operators to pay fees for air traffic control services

provided to aircraft that operate in U.S. airspace

but do not take off or land in the United States. The

authority to charge fees to aircraft conducting U.S.

overflights is contained in the Federal Aviation

Reauthorization Act of 1996. The interim final rule

bases its new overflight fees on the agency’s costs as 

calculated by the FAA’s recently developed cost

accounting system (CAS).

• Core Compensation Program. On April 23, 2000,

some 6,500 employees transferred to a new

market-based, performance-based compensation

system closely linked to the strategic goals of the

organization. The new core compensation plan

replaces the general schedule (GS) grade levels

with 12 pay bands linked to market pay levels. An

executive compensation system became effective on 

the same date for senior executives.

• FAA Accountability Board. The FAA

Accountability Board was established 2 years ago

to ensure that managers and supervisors respond

appropriately and quickly to allegations of sexual

harassment and misconduct of a sexual nature. 

The Board’s scope was expanded in July 2000 to

include allegations of harassment or other

misconduct that create a hostile or offensive work

environment. This includes harassment based on

an individual’s race, color, religion, gender, sexual

orientation, national origin, age, or disability. The

oversight provided by the Accountability Board

responds to the Administrator’s goal to make FAA a 

model employer in the Federal Government.

• Opportunity for All. In December 1999,

Administrator Garvey established the National

EEO Mediation Program and distributed

mediation procedures to all supervisors and

managers. The program will provide a more

efficient manner of addressing Equal Employment

Opportunity (EEO) complaints through alternative 

dispute resolution and ensure that mediation is at

all stages of the complaint process.

• Cost/Performance Management (CPM). FAA made 

CPM one of its highest priority programs during

FY 2000. To accomplish this effort, FAA

established a CPM framework that will facilitate

associating cost with performance. In the future,

we will be facilitating FAA’s lines of business (LOB) 

in using CPM as an integral part of managing FAA

programs. As part of this initiative, FAA continued

to make strong progress in implementing the CAS. 

We implemented the CAS for flight service station

services within the Air Traffic Services (ATS) LOB. 

We also improved our treatment of costs for ATS en

route and oceanic services and identified business

requirements for ATS terminal services. These

activities paved the way to fully implement CAS

within ATS, the FAA’s largest LOB, by the first

quarter of FY 2001. In addition, we advanced from

annual production processing to quarterly

production processing and established processes

and procedures that will enable monthly

production processing in FY 2001. Also, because

labor cost is such a large percentage of total FAA

cost, we established a labor distribution reporting

program to facilitate the implementation of labor

distribution reporting within all FAA LOB’s.

OVERVIEW -19- CHAP TER 1
-20- CHAP TER 1

FY 2000 FAA ANNUAL REPORT

(THIS PAGE IN TEN TION ALLY LEFT BLANK)
FY 2000 FAA ANNUAL REPORT

FY 2000 FINANCIAL HIGHLIGHTS

FAA BUDGET

F

AA is financed through annual and multi-year

appropriations authorized by the Congress. The

largest appropriation – Operations – funds the

salaries and associated costs to operate and maintain

the air traffic control system and to carry out its safety 

inspection, regulatory, and security responsibilities. 

The FAA budget also includes three capital

investment programs: (1) the Facilities and

Equipment (F&E) appropriation authorizes funds to

modernize and expand the air traffic control system;

(2) the Airport Improvement Program (AIP) provides

grants funding to expand and improve the Nation’s

public-use airports; and (3) the Research, Engineering

and Development (R,E&D) appropriation provides

funds to develop new aviation technology and systems. 

The Airport and Airway Trust Fund (Trust Fund),

maintained through the deposit of aviation excise

taxes, finances 100 percent of the F&E, AIP, and

R,E&D capital investment programs. These critical

capital investment programs are described in three

regularly issued plans: the Aviation System Capital

Investment Plan (CIP); the National Aviation

Research Plan; and concept planning for the National

Plan of Integrated Airport Systems (NPIAS). In

addition to funding the capital programs, in FY 2000,

the Trust Fund paid 100 percent of the FAA’s

operating cost. From FY 1995 through FY 2000, the

Operations appropriation has received between 34 to

100 percent of its funding from the Trust Fund and

the balance from the General Fund. 

Airport and Airway Trust Fund. The Airport and

Airway Revenue Act of 1970 created the Trust Fund to 

provide a stable source of funding to finance

investments in the airport and airway system and, to

the extent funds were available, cover the operating

costs of the airway system. The Act provided for the

deposit of aviation excise taxes into the Trust Fund. 

Since its establishment, various changes have been

made to the rate structure supporting the Trust Fund. 

The most recent changes were centered in the

Taxpayer Relief Act of 1997 (P.L. 105-34), effective

October 1, 1997:

• Extends aviation taxes for 10 years (through

September 30, 2007).

• Retains existing freight waybill, general aviation

fuel/gas taxes. 

• Converts the 10 percent ad valorem tax on domestic 

passenger tickets to a combination ad

valorem/flight segment tax over 3 years beginning

October 1, 1997, where a domestic flight segment is

a flight involving a single takeoff and a single

landing. The timetable for these taxes is as follows:

9% plus $1 per segment from Oct.1, 1997,

through Sept. 30, 1998;

8% plus $2 per segment from Oct.1, 1998,

through Sept. 30, 1999;

7.5% plus $2.25 per segment from Oct.1, 1999,

through Dec. 31, 1999;

7.5% plus $2.50 per segment from Jan.1, 2000,

through Dec. 31, 2000;

7.5% plus $2.75 per segment from Jan.1, 2001,

through Dec. 31, 2001;

7.5% plus $3 per segment from Jan.1, 2002,

through Dec. 31, 2002.

• After 2002, the $3 segment rate will be indexed to

the Consumer Price Index (CPI).

• Imposes a new 7.5 percent tax on payments to

airlines for frequent flyer and similar awards by

banks and credit card companies, merchants,

FI NAN CIAL HIGH LIGHTS -21- CHAP TER 1

FY 2000 FAA BUDGET

Distribution by Appropriation and Obligation Limitation

(Dollars in Millions)

F&E $2075

R,E&D $156 Airports Grants

$1958

Operations $5968
frequent flyer program partners - other

airlines, hotels, or rental car companies,

and other businesses.

• Increases the current $6 international

departure tax to $12 per passenger and

adds a $12 international arrival tax. If an

intermediate stop exceeds 12 hours,

subsequent domestic segments are taxed as

domestic transportation. These taxes were

indexed to the CPI as of January 1, 1999.

• Retains a special rule for flights between

the Continental United States and Alaska

or Hawaii at $6 for departures. This tax is

indexed to the CPI starting January 1, 1999. 

• Lowers tax rate on flights to certain rural

airports to 7.5 percent, and omits flight

segment tax component beginning October 1, 

1997.

• Transfers revenues generated by the

4.3 cents-per-gallon aviation fuel tax from

the General Fund to the Airport and

Airway Trust Fund. These revenues were formerly

dedicated to reduce the national U.S. deficit.

While held by Treasury, Trust Fund monies are

invested in Government securities. Any interest

earned is deposited into the Trust Fund. Amounts are

withdrawn from the Trust Fund as they are needed

and transferred into each FAA appropriation to cover

necessary outlays. The uncommitted balance in the

Trust Fund was approximately $7.6 billion at the end

of FY 2000. 

Operations. Funds from the Operations

appropriation are used to pay salaries and other costs

required to operate and maintain the ATC system on

a 24-hour basis. Other mission-critical expenses

financed by this appropriation include salaries and

associated costs for: (1) the planning, direction, and

evaluation of FAA programs; (2) engineering for the

establishment of air navigation facilities; (3) the

development and enforcement of flight standards and

civil air regulations; (4) the promulgation and

enforcement of standards, rules, and regulations

governing the physical fitness of airmen; (5) the

administration of research and development

programs; (6) the protection of the traveling

public in commercial U.S. air transportation

against terrorist and other criminal acts; and (7)

regulating commercial space transportation

industry.

Facilities and Equipment (F&E). Funds from

the F&E appropriation are used to modernize,

expand, and replenish the ATC infrastructure. 

Examples of F&E programs include the

deployment of improved controller-pilot data link

communications; the replacement of aging ATC

computer hardware and software in en route

centers and terminal radar approach control

facilities; the installation of advanced radar for

airport surveillance to help prevent runway

incursions and to warn of hazardous weather; the

augmentation of GPS; the fielding of automated

FY 2000 FAA ANNUAL REPORT

FI NAN CIAL HIGH LIGHTS -22- CHAP TER 1

Operations Appropriation

(By Budget Activity)

Staff Offices

1%

Air Traffic

Services

79%

Regional

Coordination

2%

Civil Aviation

Security

2%

Regulation and

Certification

11%

Financial

Services

1%

Research and

Acquisition

3%

Commercial

Space

Transportation

*

Human

Resources

1%

Operations

Obligation Trends

Fiscal Years 1991 - 2000

(Dollars in Millions)

5,941

5,553

5,248

4,931

4,531 4,580 4,573 4,641 4,361

4,036

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

FY

'91

FY

'92

FY

'93

FY

'94

FY

'95

FY

'96

FY

'97

FY

'98

FY

'99

FY

'00

Obligations (All Unexpired Accounts)

* Less than 1%
decision support tools that will enable controllers to

allow users greater freedom to fly more direct routes;

and the deployment of explosive detection systems

(EDS) and other security devices for screening

passengers, baggage, and cargo. 

The Blueprint for NAS Modernization: An Overview

of the National Airspace System Architecture Version 

4.0, released in January 1999, describes the joint FAA

and industry operational concept and long-term plan

for evolving the NAS to handle future growth in

aviation while enhancing safety. The NAS

Architecture is the principal framework of NAS

infrastructure investment decisions.

R,E&D. The FAA’s R,E&D programs are directed

toward improving safety, security, capacity,

efficiency, and ensuring the environmental

compatibility of the NAS. Areas of primary focus

include continued research in aircraft structures and

materials; systems security research; improved

aviation weather products, and resolution of

environmental issues. FAA human factors and

aviation medicine research will focus on how to best

accommodate changes in equipment and procedures

and other studies to reduce the risk of human error by

agency personnel and air crewmembers. 

Guided by the NAS Architecture, FAA publishes an

annual National Aviation Research Plan which

describes initiatives for NAS service improvements

and development of the next generation air traffic

management system.

Airport Improvement Program (AIP). Section

47104 of Title 49, U.S.C., authorizes the Secretary of

Transportation to make project grants for airport

planning and development under the AIP to maintain

a safe and efficient nationwide system of public-use

airports that meets both present and future needs of

civil aeronautics. The payment of user taxes to the

Federal Government by air travelers and shippers

contributes to the Airport and Airway Trust Fund and 

makes it possible to fund one-fourth to one-third of all

capital development at the Nation’s public-use

airports. Consequently, no Federal monies are

withdrawn from the General Fund for federally

assisted projects to maintain and enhance airport

safety, preserve existing airport infrastructure, and

expand capacity and efficiency throughout the airport 

system. In FY 2000, for the first time, Congress

allowed the use of AIP funds for the administrative

expenses related to this program.

The NPIAS draws selectively from local, regional, and 

state planning studies to estimate the costs

associated with establishing a system of airports

adequate to meet the needs of civil aviation. Costs

identified in the NPIAS are eligible (nominally) for

Federal grants-in-aid. Over the next 5 years, airport

development to keep pace with growing aviation

demands will cost $35.1 billion.

FY 2000 FAA ANNUAL REPORT

FI NAN CIAL HIGH LIGHTS -23- CHAP TER 1

Facilities and Equipment

Obligation Trends

Fiscal Years 1991 - 2000

(Dollars in Millions)

2,345

2,093

1,895

2,137

2,491 2,541

2,150

2,036 2,083 2,112

-

1,000

2,000

3,000

FY

'91

FY

'92

FY

'93

FY

'94

FY

'95

FY

'96

FY

'97

FY

'98

FY

'99

FY

'00

Obligations (All Unexpired Accounts)

Grants-in-Aid for Airports

Obligation Limit Trends

Fiscal Years 1991 - 2000

(Dollars in Millions)

1,950 1,896

1,700

1,450 1,450 1,460

1,800 1,690 1,800 1,900

0

500

1,000

1,500

2,000

2,500

FY '91 FY '92 FY '93 FY '94 FY '95 FY '96 FY '97 FY '98 FY '99 FY '00

Obligation Limit

Research, Engineering and Development

Obligation Trends

Fiscal Years 1991 - 2000

(Dollars in Millions)

212

230

256

263

181

209 199

144

155

0

50

100

150

200

250

300

FY '92 FY '93 FY '94 FY '95 FY '96 FY '97 FY '98 FY '99 FY '00

Obligations
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL HIGH LIGHTS -24- CHAP TER 1

STATEMENT OF OBLIGATIONS INCURRED BY APPROPRIATION*

AND MAJOR OBJECT CLASSIFICATION

(In Millions of Dollars)

Fiscal Year 2000

Operations

Facilities and

Equipment R,E&D

Grants-in-Aid for

Airports Totals

Personnel Compensation $3,584 $201 $32 $35 $3,852

Civilian Personnel Benefits 957 43 7 7 1,014

Benefits for Former Personnel 1 1

Travel and Transportation of Persons 93 37 3 1 134

Transportation of Things 22 2 24

Rent, Communications, and Utilities 454 65 1 1 521

Printing and Reproduction Service 11 11

Other Services 660 1,330 70 1 2,061

Supplies and Material 84 38 4 126

Equipment 29 274 3 306

Land and Structures 1 148 149

Grants, Subsidies, and Contributions 45 12 35 1,851 1,943

Total $5,941 $2,150 $155 $1,896 $10,142

(Percentage Rounded to the Nearest Tenth)

Fiscal Year 2000

Operations

Facilities and

Equipment R,E&D

Grants-in-Aid for

Airports Totals

Personnel Compensation 60.3% 9.3% 20.6% 1.8% 38.0%

Civilian Personnel Benefits 16.1% 2.0% 4.5% 0.4% 10.0%

Benefits for Former Personnel 0.0% 0.0% 0.0% 0.0% 0.0%

Travel and Transportation of Persons 1.6% 1.7% 1.9% 0.1% 1.3%

Transportation of Things 0.4% 0.1% 0.2%

Rent, Communications, and Utilities 7.6% 3.0% 0.6% 0.1% 5.1%

Printing and Reproduction Service 0.2% 0.1%

Other Services 11.1% 61.9% 45.2% 0.1% 20.3%

Supplies and Material 1.4% 1.8% 2.6% 1.2%

Equipment 0.5% 12.7% 1.9% 3.0%

Land and Structures 0.0% 6.9% 0.0% 1.5%

Grants, Subsidies, and Contributions 0.8% 0.6% 22.6% 97.6% 19.2%

Total 100.0% 100.0% 100.0% 100.0% 100.0%

* Obligations Incurred balances that are reflected on the financial statements include unexpired and expired accounts;

this chart reflects only those reported to OMB for unexpired accounts.
The Passenger Facility Charge (PFC) Program,

authorized by the Aviation, Safety and Capacity

Expansion Act of 1990, provides an additional source

of capital funding for the expansion and preservation

of airport infrastructure in the national air

transportation system. This legislation allows public

agencies controlling commercial service airports,

after receiving approval from the FAA, to charge

enplaning passengers a $1, $2, or $3 facility charge.

PFC collections and AIP funds are complementary in

the overall funding of airport improvements. The

majority of PFC approved projects are also eligible for

further funding under the AIP. As of September 30,

2000, authorized collections for the 316 locations

approved since 1992 totaled over $27.6 billion. As of

September 30, 2000, 59 percent of those commercial

service airports eligible to collect PFC’s were

approved to do so. Collections, which first began on

June 1, 1992, now produce revenue for airports at a

rate exceeding $1.5 billion per year.

Although these revenues are not considered Federal

funds, the public agency’s application to impose a PFC 

must be approved by the FAA.

FY 2000 FAA ANNUAL REPORT

FI NAN CIAL HIGH LIGHTS -25- CHAP TER 1
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL HIGH LIGHTS -26- CHAP TER 1

(THIS PAGE IN TEN TION ALLY LEFT BLANK)
FY 2000 FAA ANNUAL REPORT

FAA STRA TE GIC PLAN

STRA TE GIC PLAN

The FAA’s Strategic Plan sets forth the overallvision, mission, and direction of the agency as we 

respond to the challenges and changes facing aviation

in the 21st century. The Plan focuses upon three of the

most important mission goals and the specific

outcomes which FAA programs are dedicated to

achieve:

• Safety. By 2007, reduce U.S. aviation fatal

accident rates by 80 percent from 1996 levels.

• Security. Prevent security incidents in the

aviation system

• System Efficiency. Provide an aerospace

transportation system that meets the needs of

users and is efficient in the application of FAA and

aerospace resources.

The FAA Strategic Plan covering this year’s Financial 

Statement was established in 1998 and is intended to

guide FAA activities for 5 to as much as 20 years into

the future. The FAA Achievement Plan, published in

June 2000, describes the major actions FAA is

undertaking now – in the next 1 to 5 years – to achieve

the strategic goals.

AN NUAL PER FOR MANCE PLAN

The FAA Annual Performance Plan defines a set of

specific performance goals and outcome indicators

FAA will use to measure its progress toward

achieving its three overarching strategic goals. The

FAA Strategic Plan and the Annual Performance

Plan serve as a top-level link to the program activities

found in the agency’s fiscal year budget request. 

Taken together, they guide the FAA in its ceaseless

effort to provide the American people with the safest

and most efficient airspace system possible.

The eight performance goals highlighted on the

following pages are key elements in the DOT Strategic 

Plan and reflect the priorities established by the

White House Commission on Aviation Safety and

Security and the concerns of the FAA’s partners in

industry and in government, both state and local. 

Fis cal Year Re sults

Most of the performance results contained in this

report are for FY 1999 (October 1998 to September

1999). Some, most notably safety data, are defined by

calendar years (January 1999 to December 1999). 

The relevant reporting period, whether CY or FY, is

indicated throughout this report. 

Results for 2000 will be available on the DOT Web site 

after the DOT Performance Report is sent to Congress 

in March 2001. 

In the next section, the following 2000 performance

goals are grouped together under the agency’s three

mission-oriented goals.

STRA TE GIC PLAN -27- CHAP TER 1

STRATEGIC GOAL PERFORMANCE GOAL

Safety

Air Carrier Fatal Accident Rate. Reduce the fatal aviation accident rate

for commercial air carriers by 12% from a 1994-1996 baseline of 0.037

fatal accidents per 100,000 flight hours to 0.034 by 1999 and 0.033 by 2000

with the reduction to be achieved in 6 key areas as outlined in the Safer

Skies agenda.

General Aviation Fatal Accident Rate. Maintain the number of fatal

general aviation accidents at 379 in 2000, the 1996-1998 average.

Operational Errors (Air Traffic). Reduce the rate of operational errors and

deviations by 10 percent from the1994 baselines. The 2000 target is 0.486

errors and 0.097 deviations per 100,000 activities.

Runway Incursions. Reduce the number of runway incursions to a level 15

percent below a 1997 baseline of 292 incursions. The CY 2000 target is at

or below 248 incursions.
FY 2000 FAA ANNUAL REPORT

STRA TE GIC PLAN -28- CHAP TER 1

STRATEGIC GOAL PERFORMANCE GOAL

Security FAA has established performance goals aimed at increasing the detection of

explosive devices and weapons that may be brought aboard aircraft,

ensuring compliance with security requirements that prevent unauthorized

access to parked aircraft or other restricted areas of the airport, and

increasing the number of FAA facilities accredited as fully meeting security

standards. Because detection rates are sensitive information protected

under CFR 14 Part 191, no aviation security performance indicators are

included in this report.

System Efficiency Aviation Delays. Reduce the rate of air travel delays by 5.5 percent from a

1992-1996 baseline of 181 delays per 100,000 activities. The FY 2000

target is 171 per 100,000 activities.

Runway Pavement Conditions. Maintain in good or fair condition at least

93 percent of runways at all commercial service airports and reliever

airports, as well as selected general aviation airports.

Flight Route Flexibility. Increase the number of flight segments that

aircraft are able to fly off ATC-preferred routes to 80 percent from a 1996

baseline of 75 percent. The 2000 goal is 80 percent.

Aircraft Noise Exposure. Reduce the number of people in the U.S.

exposed to significant aircraft noise by at lease 64 percent from the 1995

baseline of 1.7 million. The FY 2000 target is at or below 600,000.
SAFETY

AIR CARRIER FATAL ACCIDENT RATE

Commercial aviation is one of the safest forms of

transportation. But when passengers board an

airplane, they give up personal control and face an

unfamiliar risk. While fairly rare, aviation accidents

can have catastrophic consequences, with large loss of

life. The public demands a high standard of safety,

and expects continued improvement. 

In absolute terms, the fatal accident rate in

commercial aviation is very low. One of the primary

reasons for this is the use of jet aircraft. Since the

introduction of jet transports into commercial

aviation in the late 1950’s, they have proven to be

safer and more reliable than propeller-driven aircraft. 

The expanded use of small jet aircraft in the scheduled 

regional segment of the industry appears to be

contributing to the marked safety improvements in

that segment, as well. Technological and procedural

improvements have also contributed to a lower

accident rate. FAA and DOT will continue to work

with the aviation community and other governmental

agencies to identify root causes of accidents and

intervene accordingly to prevent potential causes of

future accidents.

Based on preliminary data, the air carriers fatal

accident rate for calendar year 1999 was .040 per

100,000 flight hours, missing the goal of .034 by .006.

There were two major-carrier fatal accidents, one of

which involved passengers. Of the five commuter

fatal accidents, two involved passengers. Four of

them occurred in Alaska, one of which involved

passengers on-board. The seven air carrier fatal

accidents resulted in 24 fatalities.

To achieve the long-range goals, the FAA and its

partners need to focus their efforts on those causal

factors that contribute to the majority of fatal

accidents. FAA’s “Safer Skies” effort in the

commercial aviation area includes the following six

accident categories: controlled flight into terrain, loss

of control, uncontained engine failure, runway

incursion, approaches and landings, and weather.

While having little immediate impact on fatal

accident rates year to year, identifying and

implementing corrective actions in these areas will

positively impact the fatal accident rate in the future.

In 1999, under the Safer Skies Agenda, FAA and its

partners completed selection and prioritization and

began implementation of high pay off interventions

for the areas of uncontained engine failure, controlled 

flight into terrain, and approach and landing. Causal

analysis for approach and landing were completed

and recommended strategies for interventions

submitted for review by the joint Government-private 

sector team. All initiatives relating to cabin safety

were completed as planned.

FAA has also completed work on revising guidance

(including rules and advisory circulars) in such areas

as fuel tank safety; aging aircraft nonstructural

systems; aircraft performance and handling in icing

conditions; terrain awareness and warning system;

aircraft powerplant; crashworthiness; and,

structures.

In the area of industry oversight, continued

refinements have been made in both inspection

resources targeting and automated systems designed

to support aviation safety oversight of operations.

FY 2000 FAA ANNUAL REPORT

STRA TE GIC PLAN -29- CHAP TER 1

Comme rcial Air Carrie r Fatal

Accident Rate

0.00

0.05

0.10

0.15

0.20

1989 1991 1993 1995 1997 1999 2001

Trend Goal

Performance Measure: Num ber of aviation

accidents (U.S. com m ercial air carriers) per

100,000 flight hours.

2000 G oa l: .0 33

1999 G oa l: .0 34

1999 Perform anc e: .040
SAFETY

GENERAL AVIATION FATAL ACCIDENTS

Aviation accidents overall have caused about 1,000

deaths a year in recent years, with the majority of

these in general aviation (GA), which for the purpose

of this performance goal includes on-demand air taxi.

These public, private, and corporate aircraft provide a

wide range of services — like crop dusting,

firefighting, law enforcement, news coverage,

sightseeing, industrial work, and corporate

transportation — in addition to personal and

recreational flying. GA is an important element of the

U.S. transportation system and the U.S. economy.

General aviation comprises a diverse set of aviation

activities and includes all segments of the aviation

industry except commercial air carriers and the

military. The activities conducted are extensive and

varied, including student training, business and

corporate travel, air shows, aircraft and component

manufacturing and maintenance, personal and

recreational flying, and the host of businesses,

technologies, research, airports and services that

support flight operation. Aircraft range from

single-seat homebuilt aircraft, rotorcraft, and

balloons to highly sophisticated extended-range

turbojets. Some elements of general aviation operate

in hazardous environments, such as agricultural

application, external-load operations, firefighting,

and power line patrol. The level of risk is inherently

higher for these elements.

Based on preliminary data, in 1999, there were 354

general aviation fatal accidents, 29 fewer than in

1998. Since 1988, there has been a gradual trend

downward in the number of general aviation

accidents although, on a year-to-year basis, progress

has not been smooth.

Major recent interventions, which we believe are

having a positive effect on the current fatal accident

decline in general aviation, include:

• In 1999, under the Safer Skies Agenda, FAA and

its partners completed selection and prioritization 

of high pay-off interventions for the areas of

controlled flight into terrain and weather.

• Development of a number of products in the FAA’s

Aviation Safety Program; e.g., decisionmaking

training aids, personal minimums checklist video

and CD-ROM, water survival video, and a GA pilot

education program with the Aircraft Owners and

Pilots Association (AOPA) Air Safety Foundation,

and General Aviation Manufacturers Association

(GAMA) on runway incursions.

• FAA’s Aviation Safety Program has launched an

educational campaign to increase the use and

installation of seat belts/shoulder harnesses in GA

aircraft.

• Over the past 5 years, the AOPA Air Safety

Foundation has conducted over 1,200 safety

seminars, disseminating critical safety information

through these seminars and on its Web site. It has

distributed hundreds of thousands of safety

advisories on topics of weather and decisionmaking.

FY 2000 FAA ANNUAL REPORT

STRA TE GIC PLAN -30- CHAP TER 1

General Aviation Fatal Accidents

0

200

400

600

1989 1991 1993 1995 1997 1999 2001

Trend Goal

Performance Measure: Number of fatal

general aviation accidents.

2000 Goal: 379

1999 Goal: N/A

1999 Performance: 354
• FAA published Advisory Circular 23.1309-C,

Equipment, Systems and Installations in Part 23

Airplanes, and 23.1311-1A, Installation of

Electronic Display in Part 23 Airplanes. These

advisory circulars will allow for more realistic

reliability standards for general aviation airplanes

and will also allow for new, less expensive avionics

to be installed in the general aviation fleet. This will 

help to reduce the “loss of situational awareness”

and weather accidents.

• The FAA signed agreements with contractors for

Flight Information Services Data Link systems.

These systems will enable pilots to receive text,

graphical weather, and other national airspace

information directly into the cockpit display. This

unique Government and industry partnership will

greatly improve information availability for pilots,

thereby enhancing flight safety.

FY 2000 FAA ANNUAL REPORT

STRA TE GIC PLAN -31- CHAP TER 1
SAFETY

RUNWAY INCURSIONS

Runway incursions create dangerous situations that

can lead to serious accidents. A runway incursion

occurs when an aircraft, ground vehicle, or person

occupies or crosses a runway that is in active use for

takeoffs or landings. The largest aviation disaster in

history, at Tenerife, resulted from a runway

incursion. Reducing the number of runway incursions

will lessen the probability of accidents that

potentially involve fatalities, injuries, and significant

property damage.

Growth in airport operations has increased an

average of 3.5 percent per year from 1996 through

1998, and the same rate of increase continued in 1999. 

With increased operations, the risk of incursions

increases. Runway incursions are most likely to occur

at complex, high volume airports. These airports

typically have multiple parallel or intersecting

runways; multiple taxiway and runway intersections; 

complex traffic patterns; and the need for vehicular

and aircraft traffic to cross active runways.

The 1999 runway incursion target was not met.

However, it is worth noting that while operations

increased, runway incursions did not. In fact, the

number of runway incursions actually declined

slightly from 325 for 1998 to 321 in 1999. This was the 

first year runway incursions have not increased since

1993.

The issue of runway incursions is complex and

involves performance and human factors issues

associated with pilots, controllers, and vehicle

operators. While a number of new initiatives were

implemented in 1999, most will take several years to

show measurable results. As initiatives mature, we

expect to see the number of runway incursions

decreasing at a faster pace. Runway incursions have

decreased 6 of the last 7 months compared to the

previous year.

The three leading causal factors for runway incursions

continue to be pilot-controller communications, lack of

familiarity with an airport, and lack of situational

awareness.

Pilot-controller communication problems generally

result from misunderstood control instructions. In

numerous incidents, pilots proceeded onto or crossed

an active runway even after acknowledging

controller-issued hold-short instructions. Pilots are

encouraged through mass mailings, aviation articles,

and seminars on tower operations to read back runway 

hold-short instructions verbatim.

Additionally, controllers’ ability to hear and confirm

proper read-back of hold-short instructions is being

improved through the use of mandatory computerbased instruction courses. Controllers are also

mandated to perform monthly refresher training on

surface safety-related topics.

Pilot lack of familiarity with an airport including

airport signage, markings, and lighting; runway

exiting procedures; and taxi procedures is another

significant factor in runway incursions. In 1999, the

Runway Safety Program, in conjunction with AOPA,

posted digitized airport diagrams on the Internet.

Pilots are encouraged to download and review

airport/taxi diagrams prior to departing. In addition,

FY 2000 FAA ANNUAL REPORT

STRA TE GIC PLAN -32- CHAP TER 1

Runway Incursions

0

100

200

300

400

1989 1991 1993 1995 1997 1999 2001

Trend Goal

2000 Goal: 248

1999 Goal: 270

1999 Performance: 321

Performance Measure: Number of runway

incursions.
standardized taxi routes are being implemented at

select airports.

A large percentage of runway incursions are also

attributed to a lack of situational awareness by

controllers, pilots, vehicle operators, and pedestrians.

FAA implemented education and training initiatives

designed specifically to increase the level of

situational awareness of all individuals associated

with airport operations. Additionally, the FAA has

drafted an advisory circular (AC) on standardized

cockpit procedures for airport surface operations.

Technological initiatives to improve airport ground

operations, such as AMASS, GPS, and ADS-B, are in

various states of development and testing for

potential acquisition and implementation.

Implementation of “Now Strategies” (near-term

runway incursion reduction initiatives) is on course

with 16 of 18 established initiatives completed.

Examples of “Now Strategies” include mandatory

monthly air traffic management-airport operator

meetings at the top 20 airports and runway incursion

prevention training for controllers.

National Runway Incursion Action Team (RIAT)

visits were conducted at 20 airports. Regional RIAT’s

were conducted at seven additional locations.

FY 2000 FAA ANNUAL REPORT

STRA TE GIC PLAN -33- CHAP TER 1
SAFETY

OPERATIONAL ERRORS AND DEVIATIONS (AIR TRAFFIC)

One of the fundamental principles of aviation safety is 

“separation” – the need to maintain a safe distance

from other aircraft, terrain, obstructions, and certain

airspace not designated for routine air travel. Air

traffic controllers employ separation rules and

procedures that define separation standards for many 

different environments where aircraft operate. Pilots

flying under visual flight rules operate under a “see

and avoid” policy. Pilots using instrument procedures 

rely on air traffic controllers’ instructions to guide

them. When aircraft are allowed to violate these

separation standards, an operational error occurs.In

1999, operational errors totaled 937, or 0.57 per

100,000 facility activities, missing the goal of 816, or

0.496. The Office of Air Traffic Planning and

Procedures is using information on causal factors to

develop and improve procedures to help reduce the

error rates. The Office of Air Traffic Resource

Management is also using this information to address 

training issues. The top three causal factors are:

1. Failure to project future status of displayed data,

2. Failure to maintain awareness of displayed data,

and

3. Failure to detect displayed data.

Special evaluations have been conducted on a

case-by-case basis at facilities with increasing

numbers of operational errors. Processes common to

all facilities were broken down into five areas and

observed: traffic management relationships, quality

assurance programs, training issues, management

involvement, and control room environment. 

Additional emphasis has been placed on increased

involvement of facility managers including mandated 

time-in-operational-quarters requirements.

FAA continues to conduct quarterly safety meetings

with all regional Quality Assurance staff managers. 

These meetings include presentations on operational

error causal factors; reviews of performance trends

attributable to errors; and identification, review, and

dissemination of successful operational error

reduction initiatives.

FAA developed a change to Order 7210.56A, Air

Traffic Quality Assurance, effective May 1, 1999, to

require facility management and regional air traffic

division involvement in controller recertification

following an operational error or deviation.

FAA also developed a Quality Assurance Review

(QAR) process, effective May 1, 1999, to identify and

correct controller performance deficiencies prior to

occurrence of an operational error or deviation. QAR’s

provide the means to identify, investigate, and resolve

performance deficiencies through corrective training.

FAA believes that some portion of the increase in

operational errors since 1997 is attributable to

improved data reporting. In August 1998, the FAA

discovered and corrected a misunderstanding of the

procedures used in interpreting separation reported

by the National Track Analysis Program (NTAP) and

the data provided by the operation error detection

patch (OEDP). This correction should result in an

increase in the number of operational errors reported.

FY 2000 FAA ANNUAL REPORT

STRA TE GIC PLAN -34- CHAP TER 1

Operational Errors & Deviations

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

1988 1990 1992 1994 1996 1998 2000

Error Trend Error Goal

Dev. Trend Dev. Goal

Performance Measure: Operational errors

and deviations per 100,000 activities.

incursions.

Errors Dev.

2000 Goal: .486 .097

1999 Goal: .496 .099

1999 Perf.: .57 .18
SECURITY

Protecting the users of commercial air transportation

against terrorist and other criminal acts is a national

security concern. The United States and its citizens

are often the cited targets for terrorist groups seeking

to challenge power or to influence international

relations. Because terrorists seek to destroy public

confidence in the safety of air travel and disrupt this

vital segment of the U.S. and world economies, the

continued growth of commercial air transportation

depends on the effectiveness of aviation security. 

FAA’s goals in the security performance area include

actions to increase the detection of explosive devices

and weapons that may be brought aboard aircraft,

prevent unauthorized access to parked aircraft, and

ensure that FAA facilities fully meet security

standards.

Sensitive security information is protected, at a

minimum, by 14 C.F.R. Part 191. The actual target

levels will be released to appropriate parties under

separate cover in keeping with the provisions outlined 

in the Government Performance and Results Act.

FY 2000 FAA ANNUAL REPORT

STRA TE GIC PLAN -35- CHAP TER 1
SYSTEM EFFICIENCY

AVIATION DELAY

Commercial aviation delays are estimated to cost the

airlines over $3 billion a year. Passengers are directly

affected by the inconvenience of delays in terms of

missed flight connections, missed business meetings,

and loss of personal time. There are approximately 20

congested airports, each with an estimated average

annual delay of over 20,000 hours. With demand for

passenger travel increasing each year, delays

throughout the system are projected to increase.

Due to the air traffic density and the amount of

adverse weather, capacity constraints at large hub

airports lead to delays throughout the National

Airspace System (NAS). As traffic increases further

throughout the system, delays are likely to increase.

Consequently, maintaining the current delay rate

represents a significant accomplishment.

In FY 1999, the rate of volume and equipment-related

delays was 30.37 per 100,000 flight activities, which

exceeded the FAA goal of 30.70 or less. However,

when weather delays are included, the rate of

aviation delays per 100,000 activities increased to 220 

from about 200 in 1998.

The 1999 results follow a multi-year trend of

generally diminishing volume and equipment delays.

Equipment delays have increased, but when

combined with volume, there is an overall decrease.

These results may be due to a number of FAA

initiatives. The Air Traffic Control System Command

Center (ATCSCC) has placed increased emphasis on

honoring commitments to aircraft, helping to

eliminate the practice of “no notice holding.”

Collaborative decision making (CDM) was begun in

1997 and continues to be used in ground delay

programs. The National Operations Control Center

(NOCC) located within the ATCSCC was established

in January 1999. The NOCC collaborates daily with

Traffic Management to ensure NAS equipment

services are available for use. A primary focus of

NOCC is delay mitigation when the issue is FAA

equipment. The increased dissemination, within 24

hours, of written maintenance alert information

contributes to reduced equipment delays by

preventing similar events that stem from a common

cause.

Some of the decrease in volume and equipment delay

may also be attributed to a change in the method for

reporting volume-related delays in 1997 which

reclassified some volume delays as weather delays.

The change to a new performance measure in FY 2000,

which includes all causes of delay including weather,

will eliminate problems related to misclassification.

Most aviation delay and variance in delay is the result 

of weather. In FY 1999, bad weather accounted for

about 69 percent of all delays. This is a 13 percent

increase over 1998. While FAA initiatives to improve

weather prediction and flight routing can serve both

FY 2000 FAA ANNUAL REPORT

STRA TE GIC PLAN -36- CHAP TER 1

Aviation Delays

0

50

100

150

200

250

1993 1995 1997 1999 2001

Trend Goal

Performance Measure: Aviation delays

per 100,000 activities.

2000 Goal: 171

1999 Goal: #

1999 Performance: 220

# The measure for Aviation Delay was

changed after 1999 to include all causes

of delay, including weather.
to improve safety and to reduce delays, the FAA’s

ability to manage weather delays is more limited, and

aviation safety will always be the foremost concern in

air traffic control.

FY 2000 FAA ANNUAL REPORT

STRA TE GIC PLAN -37- CHAP TER 1

There are from 4,000 to 6,000 aircraft operating in the National Airspace System (NAS) during peak periods. This equates to

approximately 50,000 aircraft operations per day. The following picture shows over 5,000 aircraft operating in the system at one time.

Air Traffic Control System Command Center at Herndon, Va.

Controllers here observe the “big picture” of traffic patterns

nationwide and take action to speed the flow.

The NOCC provides status information on NAS equipment 24

hours per day, 7 days a week.
SYSTEM EFFICIENCY

RUNWAY PAVEMENT CONDITIONS

Deteriorated airport runway pavement can damage

propellers, turbines, and airplane landing gear.

Proper design, construction, and maintenance can

slow this deterioration, but runways still need

complete rehabilitation every 15 to 20 years. This

means that during a typical year, 5 to 7 percent of

runways require rehabilitation. Federal airport

funding helps achieve this necessary level of

rehabilitation and — combined with proper

maintenance — helps keep runway condition at or

above the minimum level needed to ensure efficient

airport operation.

Runway rehabilitation is among the highest priorities 

of FAA’s Airport Improvement Program (AIP), but

projects must be initiated by airport operators who

pay a portion of the cost. The availability of grants for

rehabilitation may detract from regular maintenance

programs, which are usually funded entirely by the

airport operator.

The goal of maintaining over 93 percent of runway

pavement in good or fair condition was met in 1999.

Ninety-five percent of the runways at airports

included in the National Plan of Integrated Airport

Systems (NPIAS) were reported in good or fair

condition. At NPIAS airports with commercial

service, 98 percent of runways were in good or fair

condition.

State aviation agencies made increasing use of

computer-based pavement management systems to

predict when pavement maintenance and

rehabilitation are needed and most likely to be cost

effective. These measures enhance the effectiveness of

state and Federal expenditures on airfield pavement.

The National Pavement Test Facility was completed

at the William J. Hughes Technical Center. This will

enable FAA to conduct full-scale tests of aircraft

landing gear configurations on test pavement

sections to obtain data to improve pavement design

and construction.

In FY 1999, the FAA issued 210 grants for about $297

million to help rehabilitate runways. In addition, a

3-year Pavement Maintenance Pilot Program

involving six states was completed. Under this

program, about $1.2 million in AIP funds were used to 

pay for routine pavement maintenance at 52

nonprimary airports. This program was the first

under AIP to participate in costs other than capital

planning and development. It focused on lower

activity airports that might otherwise have been

unable to pay for cost-effective preventative

maintenance. The pilot program was successful, and

the FAA proposed legislation for a permanent

program.

External factors influencing this goal in 1999 include

air carrier flight operations at commercial service

airports, which have increased by 5 percent over the

past 5 years. More frequent operations can increase

wear on runway pavement and shorten the time

predicted between construction and rehabilitation.

FY 2000 FAA ANNUAL REPORT

STRA TE GIC PLAN -38- CHAP TER 1

Runway Pavement Condition

80

85

90

95

100

1988 1990 1992 1994 1996 1998 2000

93

Performance Standard

Performance Measure: Percent of runways in

good or fair condition (commercial service,

reliever and selected general aviation airports).

2000 Goal: 93%

1999 Goal: 93%

1999 Performance: 95%
FY 2000 FAA ANNUAL REPORT

SYSTEM EFFICIENCY

FLIGHT ROUTE FLEXIBILITY

Many of the most heavily traveled routes in the

National Airspace System have published air traffic

control (ATC) preferred routes, which are based on

flying from one navigational aid to another to ensure

accuracy in navigation. These routes are designed to

minimize conflicts in congested airspace, and they are

an especially important tool in helping air traffic

controllers organize traffic flow around major

airports. However, these routes can differ

significantly from the routes that pilots or flight

planners would normally propose between two cities.

Pilots and flight planners desire the capability to

optimize their operations based on their own

objectives and constraints, which vary flight by flight

and user by user. By allowing aircraft to fly the most

direct routes, or choose other indirect routes to avoid

weather, there can be time and cost savings or

smoother flights that avoid turbulence. Enhanced

automation aids now being developed facilitate the

use of more direct routes.

Growth in aviation increases the complexity of air

traffic control, making it difficult to allow

unrestricted flight in all areas of the system. The goal

of the program is to increase system flexibility as

much as possible without interfering with safety.

In FY 1999, 77.4 percent of flights were not subject to

ATC preferred routes, falling just short of the FAA

goal of 80 percent. However, this is a slight

improvement over FY 1998 (76.2 percent).

The aim of not assigning preferred routes is to give

increased flexibility to aircraft, which may translate

into improved scheduling efficiency and reduced

flight miles. The action of not assigning or eliminating 

preferred routes does not automatically make a

contribution to the goal of aviation efficiency. It does

provide flexibility to the industry and the potential for 

improved efficiency in certain situations. The impact

of the elimination of an ATC preferred route depends

on the amount of traffic between the associated city

pair. The impact increases as the amount of air traffic

between the associated city pair increases. Air traffic

activities grew at a rate of 4 percent from 1998 to

1999.

In FY 1999, FAA eliminated 170 published routes.

There was a small saving in distance flown from

eliminating two of the special high altitude routes.

Other initiatives that have partially supported the

goal of increased flexibility are the North American

Route Program (NRP) and the Departure Procedures

(DP)/Standard Terminal Arrival Route (STAR)

program. The NRP allows filing of more efficient

routes unimpeded by the Preferred Route system,

which begins 200 miles from the departure and ends

200 miles from the arrival destination. DP/STAR

expands the utilization of the NRP by establishing

procedures that increase ingress and egress points for 

aircraft operators transitioning to NRP. DP/STAR

provides significant benefit to both the air traffic

system and system users in some of the most heavily

traveled airspace around the major metropolitan areas.

STRA TE GIC PLAN -39- CHAP TER 1

Flight Route Fle xibility

50

60

70

80

90

100

199 6 1 997 19 98 199 9 20 00

Tren d Goal

Performance Measure: Percentage of

flights that aircraft are able to fly off ATCpreferred routes.

2000 Goal: 80%

1999 Goal: 80%

1999 Performance: 77.4%
FY 2000 FAA ANNUAL REPORT

SYSTEM EFFICIENCY

AIRCRAFT NOISE EXPOSURE

Public concern and sensitivity to aircraft noise around 

airports is high. This aircraft noise is an undesired

by-product of our mobility, and the Government acts

to reduce the public’s exposure to unreasonable noise

levels.

Much of the recent progress has been achieved by

legislatively-mandated transition of airplane fleets to

newer-generation aircraft that will produce less noise. 

Most of the gains from this change will be achieved by

FY 2000. The Airport Noise and Capacity Act (ANCA)

of 1990 set December 31, 1999, as the deadline for

elimination of Stage 2 (older, noisier) aircraft

weighing more than 75,000 pounds. Growth in

aviation activity also works against easy progress.

The projections and rate of population reduction are

the result of the phaseout of older, noisier airplanes,

Stage 2. Since the phaseout occurred on schedule and

is now 100 percent complete, the numeric goal is

being met. In the future, FAA will report on results

using a new, more accurate methodology to assess the 

number of people exposed to significant levels of

aircraft noise around airports. The model

development is being done in conjunction with the

Committee on Aviation Environmental Protection

(CAEP) under the International Civil Aviation

Organization (ICAO).

At the end of 1998, airplanes that met the most

stringent FAA noise standard (Stage 3 airplanes)

comprised 86.9 percent of the total fleet of large civil

subsonic turbojet airplanes, compared to an

estimated 45 percent in 1990 when Congress enacted

ANCA. After December 31, 1999, all civil jet airplanes 

over 75,000 pounds and operating in the contiguous

United States met the Stage 3 noise standard.

Population growth, shifting population density,

urban development around airports, and increasing

flight activity have all impacted our ability to meet

this goal. These factors have generally increased the

numbers of people potentially exposed to aircraft

noise. A positive factor in lowering noise exposure has 

been aircraft fleet recapitalization within the

industry. Updated airline fleet data for 1998 indicate

a higher than expected introduction of airplanes that

have been “hushkitted” to comply with the Stage 3

noise standard.

Activities in 1999 included funding for noise

reduction activities such as soundproofing of

residences and buildings used for educational or

medical purposes in the vicinity of airports, the

purchase of buffer zones around airports, and noise

reduction planning.

FAA also monitored the annual Stage 2 phase out

compliance plans of the airlines and produced an

annual report to Congress on the progress.

STRA TE GIC PLAN -40- CHAP TER 1

Exposure to Aircraft Noise

(65 decibels or more)

0

1000

2000

3000

4000

1985 1990 1995 2000

Goal Trend

Performance Measure: Number of people

(in thousands) who are exposed to

significant noise levels (65 decibels or

more).

2000 Goal: 600

1999 Goal: 680

1999 Performance: 680
FY 2000 FAA ANNUAL REPORT

MAN AGE MENT RE PORT OF THE CFO -41- CHAP TER 2

MAN AGE MENT RE PORT OF THE CHIEF FI NAN CIAL OF FICER

When we began our implementation of a cost accounting system, we did

not expect, a few years later, to be on the leading edge of the

Government’s efforts in instituting a managerial cost accounting system 

and in establishing an agencywide labor distribution reporting system. 

Few Federal agencies, at least of the size and the complexity of the FAA,

have chosen to institute a managerial cost accounting system that fully

allocates its costs to projects and activities; most agencies have opted to

conduct cost studies. Few agencies in the Federal sector have moved

beyond estimates of labor to institute a labor distribution system that

will capture actual labor costs, a significant component of most agencies’

budgets — for the FAA a $4.9 billion cost. 

In FY 1999, the Cost Accounting System produced the annual cost of en route

and oceanic services, which were used as the basis for overflight fees. In

FY 2000, we produced the cost data on a quarterly basis and added flight

services. During FY 2001, we instituted monthly reporting and will add

costs associated with terminals services. By the end of FY 2002, we will

complete implementation of the cost accounting system in other FAA

lines of business and offices. This program promises to establish a

disciplined process for more effectively managing our organizations

based on results.

To truly manage our costs, we needed to significantly improve our understanding of FAA labor costs. In FY 2000, 

we established a formal Labor Distribution Reporting program to put in place processes for capturing the time

employees spend working on projects and activities. We also established the Cost and Performance

Management Program to link cost and performance measures with our strategic planning, performance

management, and budget processes. 

At the same time that these efforts were underway, we established and staffed a formal team to work with the

Department of Transportation’s Office of the Secretary to transition to a new, off-the-shelf accounting system,

DELPHI. When implemented, DELPHI will be a fully integrated financial management and asset system.

Significant resources have been devoted to setting up and implementing this system.

We received a qualified financial statement audit opinion this year, due to concerns about our accuracy of

computing depreciation and net book value. The correct valuation and depreciation of our property, about

$16.8 billion, has been a longstanding audit focus. We have established our baseline asset balances and

developed disciplined processes for documenting the historical cost of assets. We also developed a method to

calculate and accumulate depreciation expense outside of our accounting and property systems, which lack this

capability. Unfortunately, despite considerable effort from hundreds of people in engineering, logistics, and

accounting in Washington, D.C. and across the country, we received a qualified opinion on our FY 2000 financial

statements. The valiant efforts of so many were not without benefit and merit. However, our property systems

are old and stand alone from our financial system. It is our hope that an integrated financial system that

calculates depreciation and tracks the disposition of assets is the answer to the manual processes that take place

today. With the opportunity to implement a new accounting system, we look forward to integrating o ur property

and financial systems within the DELPHI program.

All this was accomplished in addition to our ongoing work. Our headquarters and regional accounting personnel 

processed over 8 million accounting transactions this year to provide service to all 50 states, plus U.S. territories. 

All the while, we continued to experience challenges due to limited resources and tight budgets. I am confident,
FY 2000 FAA ANNUAL REPORT

MAN AGE MENT RE PORT OF THE CFO -42- CHAP TER 2

however, that with the help of our dedicated and professional staff, we will continue to maintain the highest

standards of accountability.

These FY 2000 financial statements have been prepared in accordance with the Chief Financial Officers Act of

1990 with guidance on form and content provided by the Office of Management and Budget (OMB) and the

Federal accounting standards provided by the Federal Accounting Standards Advisory Board (FASAB). 

Questions regarding this annual report may be directed to the Financial Statements, Analysis and Control

Branch, AFM-310, 800 Independence Avenue, S.W., Washington, DC 20591.

Donna R. McLean

Chief Fi nan cial Of fi cer
FY 2000 FAA ANNUAL REPORT

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LIMITATIONS OF THE FINANCIAL

STATEMENT

• The financial statements have been prepared to report

the financial position and results of operations of the

Federal Aviation Administration, pursuant to the

requirements of 31 U.S.C. 3515(b).

• While the statements have been prepared from

the books and records of the FAA in accordance

with the formats prescribed by the Office of

Management and Budget (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 for a component of the U.S.

Government, a sovereign entity. One implication of 

this is that liabilities cannot be liquidated without

legislation that provides resources to do so.

FY 2000 FAA ANNUAL REPORT

LIMITATIONS OF THE FINANCIAL STATEMENT -55- CHAP TER 2
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -56- CHAP TER 2

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

CONSOLIDATED BALANCESHEET

As of S eptember 30, 2000

(Dollars in Thousands)

Assets

Intragovernmental

Fund Balance with Treasury (Note 2) $ 886,325

Investments (Note 3) 13,355,134

Accounts Receivable, Net (Note 4) 267,438

Other (Note 5) 45,030

Total Intragovernmental Assets $ 14,553,927

Accounts Receivable, Net (Note 4) $ 36,593

Loans Receivables and Related

Foreclosed Prop erty, Net (Note 6) 283

Cash and Other Monetary Assets (Note7) 69,354

Inventory and Related Prop erty, Net (Note 8) 988,158

General Prop erty, Plant, and Equipment, Net (Note 9) 11,529,336

Other (Note 5) 52,642

Total Assets $ 27,230,293

Liabilities

Intragovernmental Liabilities:

Accounts Payable $ 130,245

Environmental Cleanup Costs (Note 10) 453,936

Debt (Note 11) 26

Other Intragovernmental Liabilities (Note 12) 344,564

Total Intragovernmental Liabilities $ 928,771

Accounts Payable $ 488,952

Loan Guarantees 0

Federal Emp loyee and Veterans Benefits (Note 14) 944,533

Environmental Cleanup Costs (Note 10) 1,361,808

Other Liabilities (Note 12 &13) 1,333,068

Total Liabilities $ 5,057,132

Net Position Balances:

Unexpended Ap propriations (Note 15) $ 125,217

Cumulative Results of Operations 22,047,944

Total Net Position $ 22,173,161

Total Liabilities and Net Position $ 27,230,293
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -57- CHAP TER 2

Programs (Note 16 & 17)

Air Traffi c S e rvi ce

Intragovernment al $ 1,006,551

With the Public 5,660,107

Tot al 6,666,658

Less Earned Revenues (33,777)

Ne t Ai r Traffi c S ervi ce Costs $ 6,632,881

Regu lations & C ertification

Intragovernment al $ 109,663

With the Public 623,641

Tot al 733,304

Less Earned Revenues (1,650)

Ne t Re gulation s & Ce rtifi cation C osts $ 731,654

Rese arch & Acqu isition

Intragovernment al $ 115,019

With the Public 456,916

Tot al 571,935

Less Earned Revenues (30,679)

Ne t Re search & Acquisition Costs $ 541,256

Airports

Intragovernment al

Administration $ 8,203

With the Public

Grants Program 1,320,097

Administration 46,993

Tot al 1,375,293

Less Earned Revenues -

Ne t Ai rports C osts $ 1,375,293

C ivil Aviation S e cu rity

Intragovernment al $ 28,356

With the Public 156,467

Tot al 184,823

Less Earned Revenues (921)

Ne t Civil Aviation S ecu rity Costs $ 183,902

C om me rcial Space

Intragovernment al $ 1,102

With the Public 6,175

Tot al 7,277

Less Earned Revenues (20)

Ne t Comm e rcial S pace Costs $ 7,257

O th e r Programs

Intragovernment al $ 66,794

With the Public 106,200

Tot al 172,994

Less Earned Revenues (43,895)

Ne t Oth er Program Costs $ 129,099

Costs Not Assigned to Programs 146,304

Less Earned Revenues Not Assigned to Programs $ (11,695)

$ 9,735,951

CONS OLIDATED STATEMENT OF NET COST

For the Year Ended S eptember 30, 2000

(Dollars in Thou san ds)

U.S . Department of Transportation

FEDERAL AVIATION ADMINISTRATION
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -58- CHAP TER 2

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION

As of September 30, 2000

(Dollars in Thousands)

Net Cost of Operations $ (9,735,951)

Financing Sources

Appropriations Used 244,500

Taxes and Other Non-Exchange Revenues (Note 18) 10,747,853

Donations (Non-Exchange Revenue) 2,624

Imputed Financing (Note 19) 414,210

Transfers-In 1,194

Transfers-Out (87,607)

Other -

Total Financing Sources $ 11,322,774

Net Results of Operations $ 1,586,823

Prior Period Adjustments (Note 20) $ (226,759)

Net Change in Cumulative Results of Operations $ 1,360,064

Increase (Decrease) in Unexpended Appropriations (224,488)

Change in Net Position 1,135,576

Net Position Beginning of Period 21,037,585

Net Position End of Period $ 22,173,161
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -59- CHAP TER 2

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

COMBINING STATEMENT OF BUDGETARY RESOURCES

For the year ended September 30, 2000

(Dollars in Thousands)

Budgetary Resources (Note 21)

Budget Authority $ 8,935,269

Unobligated Balances - Beginning of Period 13,155,599

Spending Authority From Offsetting Collections 185,921

Adjustments (863,173)

Total Budgetary Resources $ 21,413,616

Status Of Budgetary Resources

ObligationsIncurred $ 10,477,792

Unobligated Balances-Available 10,826,197

Unobligated Balances-Not Available 109,627

Total Status of Budgetary Resources $ 21,413,616

Outlays

ObligationsIncurred $ 10,477,792

Less: Spending Authority From Offsetting

Collections and Adjustments (355,911)

Obligated Balance, Net Beginning of Period 5,217,499

Obligated Balance Transferred, Net -

Less: Obligated Balance, Net - End of Period (5,792,299)

Total Outlays $ 9,547,081
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -60- CHAP TER 2

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

COMBINED STATEMENT OF FINANCING

For the year ended September 30, 2000

(Dollars in Thousands)

Obligations and Nonbudgetary Resources

Obligations Incurred $ 10,477,792

Less: Spending Authority for Offsetting

Collections and adjustments (355,911)

Donations not in the Budget 2,624

Financing Sources for Cost Subsidies 414,210

Transfers-in (out) (86,414)

Exchange Revenue not in the Budget (4,438)

Nonexchange Revenue Not in the Entity's Budget 12,700

Less: Trust or Special Fund Reciepts Related to Exchange Revenue

in the Entity's Budget (146,764)

Other (Year-End Accounts Payable Accruals) 191,291

Total Obligations as Adjusted, and Nonbudgetary Resources $ 10,505,090

Resources That Do Not Fund Net Cost of Operations

Change in Amount of Goods, Services, and Benefits

Ordered but not yet Received or Provided $ (606,885)

Change in Unfilled Customer Orders 73,320

Costs Capitalized on the Balance Sheet

General Property, Plant & Equipment (1,372,425)

Loans 98

Purchase of Inventory (78,017)

Purchases of Non-Government Investments -

Adjustment to Cost Capitalized on the Balance Sheet (212)

Financing Sources that Fund Costs of Prior Periods (Note 22) (51,026)

Collections That Decrease Credit Program Receivables or Increase

Credit Program Liabilities -

Adjustment for Trust Fund Outlays that do not Affect Net Cost 37

Other - Identified Prior Period Adjustments (152,370)

Total Resources That Do Not Fund Net Cost of Operations $ (2,187,480)

Costs That Do Not Require Resources

Depreciation and Amortization $ 751,133

Bad Debt Related to Uncollectible Non Credit Reform Receivables

Fixed Price Variation

Gain on Disposition of Assets (61,060)

Cost of Goods Sold 143,768

Other (43,204)

Total Costs That Do Not Require Resources $ 790,637

Financing Sources Yet To Be Provided (Note 22) $ 627,704

Net Cost Of Operations $ 9,735,951
Note 1. Summary of Significant Accounting

Policies

A. Basis of Presentation

These consolidated financial statements have been

prepared to report the financial position, the net cost

of operations, the changes in net position, the status

and availability of budgetary resources, and the

reconciliation between proprietary and budgetary

accounts of the Federal Aviation Administration

(FAA). The statements are required by 31 U.S.C.

3515, the Chief Financial Officers Act of 1990, and, as

amended, by the Federal Financial Management Act

of 1994, which is Title IV of the Government

Management Reform Act of 1994. They have been

prepared from the books and records of FAA in

accordance with (1) the hierarchy of accounting

principles and standards approved by the principals

of the Federal Accounting Standards Advisory Board,

(2) the Office of Management and Budget’s (OMB)

Bulletin 97-01, Form and Content of Agency Financial 

Statement, and (3) the Department of Transportation

(DOT) and FAA’s accounting policies which are

summarized in this note. These statements, with the

exception of the statement of Budgetary Resources,

are, therefore, different from the financial

management reports, also prepared by the FAA

pursuant to OMB directives that are used to monitor

and control the FAA’s use of budgetary resources.

The FAA applies accounting principles and standards

and complies with operating policies and procedures

established, issued, and implemented by the General

Accounting Office (GAO), the OMB, and the

Department of Treasury, as recommended by the

Federal Accounting Standards Advisory Board

(FASAB), which is recognized by the American

Institute of Certified Public Accountants (AICPA) as

the entity to establish the Generally Accepted

Accounting Principles (GAAP) for the Federal

Government. The financial statements have been

prepared in accordance with the following hierarchy

of accounting principles and standards, which

constitutes another comprehensive basis of

accounting:

1. Individual Standards agreed to by the Director of

OMB, the Comptroller General, and the Secretary of

the Treasury and published by OMB and the General

Accounting Office;

2. Interpretations related to the Statement of Federal

Financial Accountings Standards (SFFAS) issued by

OMB in accordance with the procedures outlined in

OMB Circular A-134, “Financial Accounting

Principles and Standards”;

3. Requirements contained in OMB Bulletin 97-01,

Form and Content, and its amendments in effect for

fiscal year 1998;

4. The Department of Transportation (DOT)

accounting policies and reporting requirements;

5. FAA accounting policies summarized in this note

and FAA Order No. 2700.31, Uniform Accounting

Systems Operations Manual, and related

documentation containing the FAA-specific

accounting policy; and

6. Accounting principles published by authoritative

standard-setting bodies and other authoritative

sources (1) in the absence of other guidance in the first 

five parts of this hierarchy and (2) if the use of such

accounting standards improve the meaningfulness of

these financial statements.

B. Reporting Entity

The FAA was created in 1958. The FAA’s mission is to

operate the Nation’s air traffic control system and to

regulate the aviation’s safety and security. FAA is

responsible to provide U.S. air travelers with an

efficient, safe, secure, and technically advanced

airspace system. 

The FAA activities as per Treasury designation can be 

grouped into four funds.

Entity Title

1. Trust 

Fund

Airport and Airway Trust Fund

 Cash and Investments

Grants-in-Aid

Facilities and Equipment

Research and Development

Programs Administered by Other

Agencies

2. Revolving

Fund Aviation Insurance Program

3. Franchise 

Fund Administrative Services 

4. All Others Operations

FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -61- CHAP TER 2
FY 2000 FAA ANNUAL REPORT

(Unsegmented)

Facility and Equipment 

 Development

Aircraft Purchase Loan

 Guarantee 

 - Borrowing Authority for

 Program Expenses

 - Appropriation to Liquidate

 Borrowed Funds and 

 Accrued Interest

General Fund Miscellaneous

 Receipts 

Suspense Clearing

 Accounts

Items Not Classified by 

 Financing Source

The Airport and Airway Trust Fund (Trust Fund)

financed approximately 98 percent of the FY 2000

total budget. The only appropriations receiving

General Fund financing are the Facilities,

Engineering and Development appropriation and,

when enacted, the appropriation to liquidate debts to

the Treasury incurred for the Aircraft Purchase Loan

Guarantee Program. (No such liquidating

appropriation was enacted in FY 2000.) The

Operations appropriation was financed completely by

the Airport and Airway Trust Fund. FAA records a

receivable based on the total amount designated in

the Public Law, and revenue is recognized when FAA

makes a draw down from the AATF cover

expenditures.

C. Budgets and Budgetary Accounting

Congress annually enacts appropriations to permit

the FAA to incur obligations for specified purposes. 

For FY 2000, the FAA was accountable for Trust Fund 

appropriations, General Fund appropriations, a

Revolving Fund, a Franchise Fund, and borrowing

authority. The FAA recognizes budgetary resources

as assets when cash (funds held by Treasury) is made

available through Treasury General Fund warrants

and Trust Fund transfers. See paragraph B above.

D. Basis of Accounting

Transactions are recorded on an accrual accounting

basis and a budgetary basis. Under the accrual

method, revenues are recognized when earned, and

expenses are recognized when a liability is incurred,

without regard to receipt or payment of cash. Trust

Fund revenues derived from excise taxes are treated

differently. They are recorded on the basis of cash

transferred from the General Fund to the Trust Fund. 

Transactions are also classified by fund account. This

is accomplished by assigning to each transaction a

unique attribute (Treasury symbol) identifying the

corresponding appropriation and its period of

availability. 

Budgetary accounting facilitates complying with

legal controls on the use of Federal funds.

E. Revenues and Other Financing Sources

Congress enacts annual, multi-year, and no-year

appropriations to be used, within statutory limits, for

operating and capital expenditures. Additional

amounts are obtained from service fees (e.g., landing

and registry fees) and through reimbursements for

services performed for domestic and foreign

governmental entities.

The Trust Fund is sustained by excise taxes collected

by the Internal Revenue Service (IRS) from airway

system users. The IRS records excise tax revenues

deposited in the General Fund on a cash basis;

Treasury transfers an equivalent amount from the

General Fund to the Trust Fund. The Trust Fund also 

earns interest from investments in Treasury

securities. Interest income is recognized as revenue

on the accrual basis.

Appropriations are recognized as a financing source

when expended. Revenues from service fees and

reimbursements are recognized concurrently with the 

recognition of accrued expenditures for performing

the services.

F. Fund Balances with the U.S. Treasury and

Cash

The U.S. Treasury processes cash receipts and

disbursements. Funds at the Treasury are available

to pay agency liabilities. The FAA maintains petty

cash (imprest funds) outside the Treasury to facilitate 

small purchases. The FAA does not maintain cash in

commercial bank accounts. The FAA does not

maintain any foreign currency balances. Foreign

currency payments are made either by the Treasury

or the Department of State and are reported by the

FAA in the U.S. dollar equivalent.

G. Investment in U.S. Government Securities

Unexpended funds in the Trust Fund and Aviation

Insurance Revolving Fund are invested in U.S.

FI NAN CIAL STATE MENT -62- CHAP TER 2
FY 2000 FAA ANNUAL REPORT

Government securities. A portion of the Trust Fund

investments is liquidated semimonthly in amounts

needed to provide cash for the FAA appropriation

accounts. The Revolving Fund investments are

usually held to maturity. Investments, redemptions,

and reinvestments are controlled and processed by

the Treasury. 

H. Accounts and Loans Receivable

The FAA’s financial statement includes the activities

and balances of relevant Treasury General Fund

Miscellaneous Receipt accounts. The FAA maintains

accountability for defaulted loans under the Aircraft

Purchase Loan Guarantee Program. Upon default,

the FAA established accounts receivable in the

General Fund Miscellaneous Receipts account to

reflect the amount due from the borrower for principal 

and interest. The FAA also established an

intragovernmental liability to offset the accounts

receivable which represents an asset of the Treasury,

not the FAA.

I. Operating Materials and Supplies

Operating materials and supplies consist primarily of

unissued materials and supplies that will be

consumed in normal operations. In FY 1998, the FAA

discontinued the use of standard cost and began

valuing materials and supplies using moving

weighted average. Other classifications of materials

and supplies are valued on the basis of actual prices

paid.

Adjustments for the proper valuation of reparable,

excess, obsolete, and unserviceable items are made to

the appropriate allowance account at fiscal yearend. 

The allowance for reparable items is recognized as a

current period expense. The allowance for excess,

obsolete, and unserviceable items is recognized as a

gain or a loss. Operating materials and supplies are

reclassified as expenses or work in progress when

consumed or issued. 

J. Property, Plant and Equipment (PP&E)

FAA capitalizes an acquisition if its costs exceed

$25,000 and has a useful life exceeding 2 years. The

FAA reports general PP&E at original acquisition

cost.

Depreciation expense is calculated using the

straight-line method. No depreciation expense is

recognized on an asset during the fiscal year it is put

in service.

A full year’s depreciation will be recognized during the

asset’s final year of use. The FAA does not recognize

residual value of its PP&E, except for aircraft, which

are depreciated to a 25% salvage value. The FAA

adopted this depreciation policy in FY 1998 and, at that 

time, recognized accumulated depreciation for prior

years as well. The useful life classifications for

capitalized assets are as follows:

Asset Classification

Useful Life

(years)

Offices, Buildings, Warehouse Buildings,

Residential Properties, Air Traffic Control

Towers, and Enroute Air Traffic Control

Centers

40

Mobile Homes, Aircraft

20

Original Roads, Sidewalks, Parking Lots,

and All Other Structures 15

Printing, photographic, and projection

equipment 13

Capital Improvements, Facility

Modifications, Leasehold Improvements (or

expiration of lease whichever comes first),

Portable and Installed Communications

equipment excluding Air Navigation and

Air Traffic Control Facilities, and Avionics

Equipment

10

Office Furniture and Equipment including

the following categories: Prototype and

Experimental, Research and Development

Test, Shop, Emergency Readiness, Training, 

Portable Test and Rack Mounted Test

equipment for Air Navigation and Air

Traffic Control Facilities, Aircraft Test

Equipment, and Other nonclassified

Equipment

7

Vehicles and Automatic Data Processing

Equipment 5

The FAA has established the following categories of

economic service life for some of its personal property

and facilities and equipment assets. 

FI NAN CIAL STATE MENT -63- CHAP TER 2
Functional Area

Economic

Service Life

(Range)

Decision Support Systems

4-20

Communications

10-20

Weather

15-20

Navigation/Landing

20

Surveillance

20

Facilities 40

Facilities’ Support Equipment 

20

Mission Support

20

User Equipment 10-20

Buildings acquired under capital leases are amortized 

over the lease term. If the lease agreement contains a

bargain purchase option or otherwise provides for

transferring title of the asset to the FAA, the building

is depreciated over a 40-year service life. 

Construction in progress is valued at actual (direct)

costs, plus applied overhead and other indirect costs as

accumulated by the regional project materiel system. 

The General Services Administration (GSA) receives

payment for real property that is under its control and 

is used by the FAA. Payments are made from an

appropriation to the Office of the Secretary of

Transportation (OST), part of which (corresponding to 

the FAA costs) is derived from the Trust Fund. 

K. Prepaid and Deferred Charges

Advance payments are generally prohibited by law;

there are some exceptions, such as subscriptions. 

When permitted, payments made in advance of the

receipt of goods and services are recorded as prepaid

charges at the time of prepayment and recognized as

expenses when the related goods and services are

received.

L. Liabilities

A liability represents the amount to be paid by the

FAA as the result of a transaction or event that has

already occurred. The FAA, absent of an

appropriation, cannot liquidate any liabilities.

Liabilities for which an appropriation has not yet

been enacted are, therefore, classified as unfunded

liabilities, and there is no certainty that such

appropriation will be enacted.

M. Borrowing Payable to the Treasury

Borrowing involves loans from the Treasury to fund

expenses in the Aircraft Purchase Loan Guarantee

Program. Treasury renews the debt obligation until

the FAA receives an appropriation to liquidate the

principal and interest. No such appropriation was

enacted for FY 1999.

N. Interest Payable to the Treasury

The FAA owes interest to the Treasury based on its

debt to the Treasury as a result of borrowing for the

Aircraft Purchase Loan Guarantee Program.

O. Annual, Sick, and Other Leave

Annual leave is accrued as it is earned, and the

accrual is reduced as leave is taken. At each biweekly

pay period, the balance in the accrued annual leave

account is adjusted to reflect the latest pay rates and

unused hours of leave. Funding will be obtained from

future financing sources to the extent that current or

prior year appropriations are not available to fund

annual leave earned but not taken. Sick leave and

other types of nonvested leave are expensed when

taken.

In FY 1998, under the National Air Traffic Controller

Association (NATCA) agreement, Article 25, Section

13, Air Traffic Controllers covered under the Federal

Employees Retirement Systems (FERS) became

eligible, upon retirement, for a sick leave buy back

option. 

P. Accrued Workers’ Compensation

A liability is recorded for estimated and actual future

payments to be made for workers’ compensation

pursuant to the Federal Employees’ Compensation

Act (FECA). The liability consists of the net present

value of estimated future payments calculated by the

U.S. Department of Labor (DOL) and the

unreimbursed cost paid by DOL for compensation

paid to recipients under FECA. The actual costs

incurred are reflected as a liability because FAA will

reimburse DOL 2 years after the actual payment of

expenses. Future Appropriations will be used for the

FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -64- CHAP TER 2
reimbursement to DOL.

Q. Retirement Plan

The FAA employees who participate in the Civil

Service Retirement System (CSRS) are beneficiaries

of the FAA’s matching contribution equal to 7 percent

of pay to their annuity account in the Civil Service

Retirement and Disability Fund. 

On January 1, 1987, the Federal Employees Retirement 

System (FERS) went into effect pursuant to Public Law

99-335. FERS and Social Security automatically cover

most employees hired after December 31, 1983.

Employees hired prior to January 1, 1984, could elect,

either to join FERS and Social Security, or to remain

in CSRS. FERS offers a savings plan to which the

FAA automatically contributes 1 percent of pay and

matches any employee contribution up to an

additional 4 percent of pay. For FERS participants,

the FAA also contributes the employer’s matching

share for Social Security. 

Beginning in FY 1997, the FAA began to recognize the 

cost of pensions and other retirement benefits during

the employees’ active years of service. The Office of

Personnel Management (OPM) actuaries determine

pension cost factors by calculating the value of

pension benefits expected to be paid in the future and

communicate these factors to the FAA for current

period expense reporting. OPM also provides

information regarding the full cost of health and life

insurance benefits. The FAA recognized the

offsetting revenue as imputed financing sources for

the extent of these additional expenses that will be

paid by OPM.

R. Contingencies

The FAA recognizes losses for contingent liabilities

when such losses are probable and reasonably

estimable. 

FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -65- CHAP TER 2
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -66- CHAP TER 2

Note 2. Fund Balances with Treasury

Unobligated and restricted fund balances represent balances of appropriations for which the period of

availability for (voluntary) obligation has expired. These balances are only available for upward adjustments of

obligations incurred during the period for which the appropriation was available for obligation or for paying

claims attributable to the appropriation. Pursuant to 31 USC 1552, appropriation accounts are canceled at the

close of the fifth fiscal year following the last fiscal year for which they were available for obligation. Fund

balances in the amount of $11.6 million in canceled appropriations at fiscal yearend were removed from the

balance sheet. The amount withdrawn biweekly from the Trust Fund is based on cash outlays, not on

obligational authority, to minimize interest costs. Negative unobligated balances are covered by i nvested funds

in the Airport and Airway Trust Fund.

Note 3. Investments

(Dollars in Thousands)

Unobligated Unobligated

Obligated & Available & Restricted Total

Trust Fund $ 2,977,773 $ (2,003,690) $ (183,576) $ 790,507

Operations General Fund 87,516 3,359 62,707 153,582

Franchise Fund 4,943 4,024 8,967

Revolving Fund (71,788) (8,026) 79,953 141

Other Funds 114 (66,986) - (66,872)

Total $ 2,998,558 $ (2,071,319) $ (40,916) $ 886,325

Cost

Amo rtization

Method

Unamortized

(Premium)

Discount

Investments

Net

Other

Adjustments

Market

Value

Disclosure

Intrago vernmental

Se curities:

Nonmarketable, Par Value

Trust Fund (1) $ 13,096,852 $ - $ 13,096,852 $ - $ -

Nonmarketable,

Market-Based

Aviation Insurance Interest

Revo lving Fund (2) 75,932 Method 2,581 78,513 - -

Subtotal $ 13,172,784 $ 2,581 $ 13,175,365 $ - $ -

Accrued Intere st $ 182,350 $ -

Total $ 13,355,134 $ -

(Dollars in Thousands)
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -67- CHAP TER 2

A total of $13.1 billion was invested in U.S. Treasury Certificates of Indebtedness as of September 30, 2000, at a

rate of 6.5 percent, maturing June 30, 2001. 

(1) Nonmarketable par value Treasury securities are special series debt securities, issued by the Bureau of the

Public Debt to Federal accounts, and are purchased and redeemed at par (face value) exclusively through

Treasury’s Finance and Funding Branch. The securities are redeemed at face value on demand; thus, investing

entities recover the full amount invested, plus interest. The Trust Fund investments are made by the Fund’s

trustee, the Secretary of the Treasury.

(2) Nonmarketable, market-based Treasury securities are debt securities that the Treasury issues to Federal

entities without statutorily fixed interest rates. Although the securities are not marketable, their terms (prices

and interest rates) mirror the terms of marketable Treasury securities. FAA amortizes premiums and discounts 

on market-based Treasury securities over the life of the security using the interest method. The following

amounts are invested in market-based Treasury securities: 

Note 4. Accounts Receivable

A delinquency notice is sent to each debtor when billings remain uncollected for 30 days after the Bill for

Collection date. A second delinquency notice is sent another 30 days later if the debtor does not respond. Salary

or retirement offset action may be taken when the debtor is a current or former Federal employee. Other

attempts at collection may be taken for debtors who are not current or former Federal employees. In 1997, the

Effective

Maturity Interest

Date Rate Amount

1 12/08/2000 5.33% $ 14,798,000

2 03/01/2001 5.90% 25,823,000

3 05/31/2001 5.79% 17,993,000

4 08/30/2001 5.75% 19,899,000

$ 78,513,000

(Dollars in Thousands)

Gross Allowance for Net

Accounts Uncollectible Amount

Due Amounts Due

Intragovernmental Receivables $ 267,438 $ - $ 267,438

Other Receivables 39,803 (3,210) 36,593

Total Receivables $ 307,241 $ (3,210) $ 304,031

Reconciliation of Uncollectible Amounts:

Intragovernmental Other

Beginning Balance $ - $ (6,803)

Additions - (2,884)

Reductions - 6,477

Ending balance $ - $ (3,210)
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -68- CHAP TER 2

FAA implemented certain provisions of the Debt Collection Improvement Act of 1996, P.L.1041-34, which

requires, among other things, that Federal agencies submit accounts receivable that are over 180 days

delinquent to the Department of Treasury (Treasury) for collection. Treasury may take such actions as tax

refund offset, consumer reporting, and referral to collection agencies. 

An allowance for uncollectible accounts receivable is established either based upon a monthly review of

outstanding accounts and the failure of all collection efforts, management determines that collection is unlikely

to occur, or when an account for which no allowance has already been established is submitted to Treasury for

collection. Accounts receivable in appropriations canceled on September 30, 2000, pursuant to 31 U SC 1552, are 

no longer FAA assets. Accordingly, accounts receivable balances totaling $116,732 in canceled appropriations

at fiscal year end were removed from the balance sheet.

Note 5. Other Assets

(1) Represents advance payments to other Federal Government entities under the 31 USC 1535 for agency

expenses not yet incurred or for goods or services not yet received. 

(2) Includes assets transferred between FAA regions. Transferred items remain in the undistributed asset

account until removed by the recipient region. Transfer transactions may include some expenses.

(3) Represents advance payments to employees for agency expenses not yet incurred. 

Other Entity AssetsIntragovernmental

Advances and Prepayments $ 43,576 (1)

Undistributed Foreign Costs 188

UndistributedCosts- TreasuryClearing 947

Other Assets - Undistributed 319 (2)

Total Other AssetsIntragovernmntal $ 45,030

Other Entity Assets

Advances and Prepayments 52,642 (3)

Total Other Entity Assets $ 97,672

(Dollarsin Thousands)
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -69- CHAP TER 2

Note 6. Loans and Loan Guarantees, Non-Federal Borrowers

FAA has no direct loan programs, but FAA administers the Aircraft Purchase Loan Guarantee Program. 

Authorization for issuing new loan guarantees expired in 1988. The only remaining program function is to

maximize recoveries from defaulted loans. 

Accounts receivable from debtors on account of defaulted guaranteed loans are reported net of an allowance for

estimated uncollectible amounts. The Federal Credit Reform Act was enacted after the authority to issue new

guarantees expired and, therefore, does not apply to FAA’s loan guarantees. 

Administrative expenses to maintain residual values in this program are minimal. FAA has no full-time

employees administering the program. 

Note 7. Cash, Foreign Currency and Other Monetary Assets

Note 8. Inventory and Related Property

Inventory and related property consist of general operating material and supplies, aircraft parts, and spare

parts located at field facilities. FAA uses the moving weighted average cost method to value operating materials

and supplies. FAA currently expenses operating materials and supplies as issued or consumed. 

Items are considered for repair based on condition levels and if the maximum repair cost does not exceed 65

percent of the original cost. The allowance method is used to account for operating materials and supplies held

(Dollars in Thousands)

Defaults on Pre-1992 Guaranteed Loans:

Aircraft

Purchase

Loan

Guarantee

Program

Defaulted

Guaranteed

Loans

Receivable,

Gross

Interest

Receivable

Allowance

for Loan

Losses

Foreclosed

Property

Defaulted

Guaranteed

Loans

Receivable,

Net

$ 613 $ 7 $ (337) $ - $ 283

(Dollars In Thousands)

Imprest Fund $ 4

Undeposited Collections 69,350

Total Cash, Foreign Currency, and Other Monetary Assets $ 69,354

(Dollars in Thousands)

Operating Material and Supplies:

Value Allowance Net Value Valuation Method

Items Held For Use $ 877,734 $ - $ 877,734 Moving Weighted Avg

Excess, Obsolete Unserviceable 32,054 (13,376) 18,678 Moving Weighted Avg

Items Held for Repair 262,131 (170,385) 91,746 Moving Weighted Avg

Total Inventory and Related Property $ 1,171,919 $ (183,761) $ 988,158
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -70- CHAP TER 2

for repair, reducing the net carrying value of such items to 35 percent of their original cost. Current period

expenses are recognized for the amount of the annual increase or decrease to the allowance account. In FY2000,

FAA recognized $ 18.2 million increase in the allowance for items held for repair. 

Scrap and salvage items are written down to zero value and may be sold for nominal amounts. FAA transfers

excess items for disposal into the Governmentwide automated disposal system. Disposal proceeds may go to the

General Fund or to an FAA appropriation, depending on the nature of the item and the disposal method. FAA

may not donate items.

Note 9. Property, Plant and Equipment, Net

In FY 2000, FAA implemented a replacement Real Property System for its Land, Buildings, and Structures. The 

Real Estate Management System (REMS) serves as the subsidiary record and was used to support the

acquisition value for FAA Financial Statement reporting.

FAA reviewed its Facilities and Equipment Major System Acquisition costs expended during FY2000 and

identified more than $553 million of additional capital costs. A capitalization percentage was applied to the

FY2000 expenditures based on results from the FY 1999 “top-down” detailed analysis of two decades of NAS

system acquisition. These capital costs were properly included as part of the Construction-in-Prog ress account

balances. 

FAA initiated an allocation process for its headquarters Construction-in-Progress capital accounts. This

allocation process moves centrally funded capital expenditures to individual Region job orders in the

Work-in-Process. The total amount that was distributed to the regions in FY2000 was approximately $1.2 billion.

FAA continued to track its Work-in-Process account with performance measures so that project closeout to

in-use assets was completed in a timely manner. Closeout is required within 6 months after new assets/capital

improvements are placed in service. During FY 2000, more than $1 billion of Work-in-Process was closed to the

in-use asset accounts. In addition, the regions continue to maintain Work-in-Process centralized folders that

support all accumulated project costs. 

In total, FAA recognized approximately $95 million (*) in current and prior year losses for Property Not in Use. 

Of this amount $37.4 million was recognized as a loss on fixed assets for excess and surplus property in the

Utilization Screening and Disposal System (USD) in FY2000.

(Dollarsin Thousands)

Net

Deprec Services Acquis. Accum. Book Value

Class of Fixed Assets Method Life Value Deprec. FY 2000

Land None None $ 84,422 $ - $ 84,422

Buildings & Structures SL 15-40 3,198,406 (1,403,311) 1,795,095

Leasehold Improvements SL - 27,619 - 27,619

Aircraft SL 20 395,361 (173,474) 221,887

Aircraft Engines SL 7 2,761 - 2,761

ADP Software None - 54,062 (30,063) 23,999

Equipment SL 5-20 10,017,381 (3,659,425) 6,357,956

Assets Under Capital Lease SL Term-40 109,319 (27,995) 81,324

Construction in Progress None None 2,934,273 - 2,934,273

Property Not in Use - - 95,244 (95,244) (*) 0

$ 16,918,848 $ (5,389,512) $ 11,529,336
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -71- CHAP TER 2

Note 10. Environmental and Disposal Liabilities

In FY 2000 the FAA reported total environmental remediation costs of $ 441 million, which represents a $336

million increase from FY 1999. The increase in the environmental remediation liability is due to an increase in

the number of contaminated sites identified. In FY 1999 the FAA identified 239 sites for cleanup; in FY 2000 the

number of cleanup sites increased to 436.

FAA’s liability for environmental cleanup and decommissioning costs as of September 30, 2000, was $1.4 billion. 

This represents a $200 million increase of the $1.2 billion reported in FY 1999 for the ground based navigation

aids. The estimate changed because the program office used a different system; i.e., Capability and Architecture 

Tool Suite, instead of Satellite Navigation for producing the estimates.

In FY 2000, FAA conducted a review of the assets commissioned in FY 1999 and 2000 to determine if

environmental contamination and removal of hazardous materials would be necessary upon decommissioning

of these assets. In response to more stringent environmental regulations, the FAA created a new division to

serve as the agency’s advocate for environmental compliance. The division is responsible for reviewing and

eliminating the environmental impact of all assets commissioned by the FAA. As a result of the FAA’s proactive

measures regarding environmental contamination, the review panel concluded that the environmental c leanup

and disposal costs attendant to assets commissioned in FY 1999 and 2000 to be minimal.

Note 11. Debt

(Dollars in Thousands)

Intragovernmental Other Total

Environmental Remediation $ 110,486 $ 331,458 $ 441,944

Environmental Cleanup and Decommissioning 343,450 1,030,350 1,373,800

Total Environmental Liabilities $ 453,936 $ 1,361,808 $ 1,815,744

(Dollars in Thousands)

Beginning Net Ending

Not Covered by Budgetary Resources Balance Borrowing Balance

Other Debt:

Aircraft Purchase Loan

Guarantee Program

Debt to the Treasury $ 24 $ 2 $ 26

Total Debt $ 24 $ 2 $ 26
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -72- CHAP TER 2

Note 12. Other Liabilities

(1) Accrued payroll and employee benefits represent the unpaid pay period September 10 through

September 30, 2000.

(2) An unfunded liability is recorded for unreimbursed actual cost to be made for workers compensation

pursuant to the Federal Employees’ Compensation Act (FECA) to the Department of Labor (DOL), which

administers the Federal Employees’ Compensation Fund. Funding for the amount charged to FAA is normally

(Dollarsin Thousands)

Other Intragovernmental Liabilities

Non-Current

Liability

Current

Liability Total

Advancesfrom Others $ - $ 27,325 $ 27,325

Accrued Payroll & Benefitsto Other Agencies - 36,645 36,645

Proceeds From Replacement of Property - 12 12

Other - 88,567 88,567

Liabilities Covered by Budgetary Resources $ - $ 152,550 $ 152,549

Federal Employees Compensation Act $ 108,681 $ 83,334 $ 192,015

Liabilities Not Covered by Budgetary Resources $ 108,681 $ 83,334 $ 192,015

Total OtherIntragovernmental Liabilities $ 108,681 $ 235,884 $ 344,564

Other Liabilities

Advancesfrom Others, Unclassified $ - $ 2,758 $ 2,758

Accrued Payroll & Benefitsto the Employees - 239,790 239,790

Liability for Unapplied Collections - (86,437) (86,437)

Other Accrued Liabilities - 96,965 96,965

Liabilities Covered by Budgetary Resources $ - $ 253,077 $ 253,076

Accrued Unfunded Annual Leave & Assoc. Benefits $ 398,093 $ - $ 398,093

Sick Leave Compensation Benefitsfor Air Traffic Controllers 43,715 - 43,715

Capital Leases(Note 13) 87,765 - 87,765

Contingent Liabilities for Legal Claims 537,768 537,768

Contingent Liabilities for ReturnRights 12,651 12,651

Liabilities Not Covered by Budgetary Resources $ 1,079,993 $ - $ 1,079,993

Total Other Liabilities $ 1,079,993 $ 253,077 $ 1,333,068
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -73- CHAP TER 2

appropriated for the fiscal year ending 2 years after the FAA accounting period in which the expense was

incurred. Therefore, FAA’s FY 2000 accrued liability includes workers’ compensation benefits paid by DOL for

the periods July 1, 1998 through June 30, 1999; July 1, 1999 through June 30, 2000; and July 1, 2000 through

September 30, 2000.

(3) The estimated liability for accrued wages includes annual, home, and military, and compensatory hours

(credit hours and restored) plus the agency’s cost of employee benefits associated with such compensated

absences for the period ending September 30, 2000.

(4) In FY 1998, under the National Air Traffic Controller Association (NATCA) agreement, Article 25, Section

13, Air Traffic Controllers covered under the Federal Employees Retirement Systems (FERS) became eligible,

upon retirement, for a Sick Leave Buy Back Option. Under this option, an employee who attains the required

number of years of service for retirement shall receive a lump sum payment for forty (40) percent of the value of

his or her accumulated sick leave as of the effective date of their retirement. The total estimated sick leave buy

back contingency for FAA for those Air Traffic Controllers eligible for retirement, based on current sick leave

balances, for FY 2000 is $43.7 million.

(5) In FY 2000, FAA recognized $537.8 million for legal claims that have been asserted and are pending. Of this

amount, $85 million was estimated to be paid from agency appropriations and $453 million to be paid from the

permanent appropriation for judgments, awards, and compromise settlements (Judgment Fund) administered

by the Department of Justice. The $537.8 million is $67 million higher than the $470.8 million that was

recognized in FY 1999. The $67 million difference was recognized as a FY 2000 expense. FAA’s maximum

exposure for loss for contingent liabilities associated with legal claims is $ 14.9 billion.

(6) Contingent Liabilities for the Return Rights Program decreased by $13.25 million from $25.9 million in

FY 1999 to $12.65 million in FY 2000. Because of evidence that the FY 1999 liability may have been overstated,

the $13.25 million decrease was treated as a prior period adjustment. The program covers temporary

assignments for 2 to 4 years. At the end of FY 2000, approximately 253 employees who previously had accepted

transfers to overseas or certain domestic locations were contractually entitled to a future return move at

Government expense. The typical cost per move is $50,000. The liability may be overstated because not every

employee remaining in the program will exercise his or her right. If every employee in the program did exercise

his or her right, the liability would be as follows:

 FY 2001 $5,100,000

 FY 2002 $6,600,000

 FY 2003 $950,000

 $12,650,000

 
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -74- CHAP TER 2

Note 13. Leases

FAA as Lessee

Capital Leases

FAA’s capital lease payments are funded annually. The following represents capital lease accounting treatment 

under generally accepted accounting principles:

(1) Capital lease assets are recorded at the net present value of the total minimum lease payments over the lease

duration, valued at the lease inception.

(2) In FY 1996, FAA implemented the depreciation/amortization provision of SFFAS No. 6, which is applicable

to assets acquired under capital lease. The total assets, valued at $109 million under capital lease for FY 2000, is 

$45 million less than the $154 million reported in FY 1999. FAA’s FY2000 Capital Lease liability of $87.8 million 

was only $1.3 million less that the amount reported in FY1999.

(3) Amounts due within the current fiscal year corresponding to the principal portion of the lease payments are

recorded as current year obligations. The remaining principal payments are recorded as unfunded lease

liabilities. The imputed interest is funded and expensed annually. Interest amounts imputed to subsequent

years (aggregating $67 million) are not recorded as unfunded liabilities in the Departmental Accounting and

Financial Information System (DAFIS).

(Dollars in Thousands)

Summary of Assets Under Capital Leases:

Land, Buildings & Machinary: $ 109,319

Less: Accumulated Amortization (27,995)

Net Assets Under Capital Lease $ 81,324

Future Payments Due

Fiscal Year

Year 1 (FY 2001) $ 15,885

Year 2 (FY 2002) 15,707

Year 3 (FY 2003) 15,016

Year 4 (FY 2004) 14,957

Year 5 (FY 2005) 14,197

After 5 Years(FY 2005 to Contract End) 78,902

Less: Imputed Interest (66,899)

Total Capital Lease Liability $ 87,765

Liabilities Not Covered by Budgetary Resources $ -

Liabilities Not Covered by Budgetary Resources $ 87,765
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -75- CHAP TER 2

Operating Leases: 

FAA leases property, aircraft, equipment, and telecommunications under operating leases. Such leases are

funded annually and expensed as recurring charges in DAFIS. Unfunded liabilities and future funding

requirements for operating lease payments due in future years are not recorded in DAFIS. 

The cumulative amount due on operating leases after 5 years does not include estimated payments for leases

with annual renewal options. Estimates of the lease termination dates are subjective, and any projection of

future lease payments would be arbitrary. 

FAA as Lessor: 

Operating Leases

FAA leases Ronald Reagan Washington National Airport and Washington Dulles International Airport to

the Metropolitan Washington Airports Authority, the airports’ sponsor. The lease took effect in March 1987

at $3 million per year for a 50-year term. Subsequent annual rental payments are adjusted by applying the

Implicit Price Deflator for the Gross National Product published by the Department of Commerce. Additionally,

the parties may renegotiate the level of lease payments attributable to inflation costs every 10 years. Upon lease 

expiration, the airports and facilities, originally valued at $244 million, together with any improvements

thereto, will revert to the Federal Government. In addition, FAA leases equipment to foreign governments and

leases parcels of Government-owned land, generally for agriculture.

Future Payments Due

Land & Mach &

Fiscal Year Buildings Equipment Other Total

Year 1 (FY 2001) $ 45,685 $ 2,809 $ 264 $ 48,757

Year 2 (FY 2002) 41,143 2,721 245 44,109

Year 3 (FY 2003) 37,818 2,732 227 40,777

Year 4 (FY 2004) 33,655 2,444 208 36,307

Year 5 (FY 2005) 30,887 1,881 199 32,967

After 5 Years(FY 2006 to Contract End) 71,848 3,370 142 75,360

Total Future Operating Lease Payments $ 261,035 $ 15,957 $ 1,285 $ 278,277

(Thousands of Dollars)

Future Payments Due

Land & Mach &

Fiscal Year Buildings Equipment Other Total

Year 1 (FY 2001) $ 4,264 $ 90 $ 57 $ 4,411

Year 2 (FY 2002) 4,682 90 52 4,824

Year 3 (FY 2003) 5,142 90 50 5,282

Year 4 (FY 2004) 5,644 90 41 5,775

Year 5 (FY 2005) 6,200 0 35 6,236

After 5 Years (FY 2006 to Contract End) 146,222 0 34 146,257

Total Future Operating Lease Payments $ 172,155 $ 358 $ 270 $ 172,783

(Thousands of Dollars)
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -76- CHAP TER 2

Note 14. Federal Employee and Veterans Benefits Payable 

Note 15. Unexpended Appropriations

Differences include a cash balance recorded by Treasury in an erroneous Treasury symbol (6901301) for

$3.2 million, a rescission for $11.8 million in Treasury Symbol 6971301, and possible discrepancies in recording

cumulative amounts totaling $21.5 million, which were transferred from the reimbursable to the direct

apportionment. The remaining differences include FSM adjustments.

Note 16. Total Cost and Earned Revenue by Budget Functional Classification

(Dollars in Thousands)

Other Post-Employment Benefits

Federal Employees Compensation Act:

Actuarial Liabilities $ 944,533

Total $ 944,533

(Dollars in Thousands)

Operations

General Fund

Other

Funds Total

(1) Unobligated

(a) Available $ 3,359 $ 54 $ 3,413

(b) Unavailable 62,707 1 62,708

(2) Undelivered Orders 95,081 173 95,254

Sub-total $ 161,147 $ 228 $ 161,375

Other Differences (37,104) 946 (36,158)

Total Unexpended Approprations $ 124,043 $ 1,174 $ 125,217

A. Gross Cost and Earned Revenue by Budget Functional Classification Code

(Dollars in Thousands)

Total Cost Earned Revenue Net Cost

Functional Classification:

Transportation Programs $ 9,857,853 $ (122,639) $ 9,735,214

Community and Regional Development Programs 690 - 690

General Government Programs 47 - 47

Total Cost $ 9,858,590 $ (122,639) $ 9,735,951
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -77- CHAP TER 2

Note 17. Net Cost by Programs

FAA’s six lines of business represent the programs reported on the Statement of Net Cost. Assigned cost centers

to each line of business permit the direct accumulation of costs. Other costs that are not directly traced to each

line of business, such as agency overhead, are allocated by applying ratios representing the cost for each line of

business cost compared to total expenses, excluding grants. Subsequent to closing FY 2000, FAA completed an

analysis of its 1999 Research and Acquisitions (ARA) costs. Specifically, $773 million of contract expenditures

included in the $1.3 billion of costs presented on the FY1999 Consolidated Statement of Net Cost were reviewed.

After analyzing the nature of the project charges (capital vs. expense), FAA concluded that $397 million of

capital charges were included in the $773 million.

Note 18. Taxes and Other Nonexchange Revenue

Taxes are collected by the Department of the Treasury (Treasury) Internal Revenue Service for FAA’s Airport

and Airway Trust Fund. These taxes can be withdrawn only as authorized by various FAA appropriation s. The

amounts reflected above are taxes reported to FAA by Treasury. Treasury estimates taxes to be collected each

quarter and adjusts the estimates by actual collections. 

B. Intragovernmental Gross Cost and Earned Revenue by Budget Functional Classification

(Dollars in Thousands)

Total Cost Earned Revenue Net Cost

Functional Classification:

Transportation Programs $ 1,334,622 $ (84,811) $ 1,249,811

Community and Regional Development Programs -

General Government Programs -

Total Cost $ 1,334,622 $ (84,811) $ 1,249,811

(Dollars in Thousands)

Passenger Ticket Tax $ 7,158,909

Waybill Tax 522,969

International Departure Tax 1,384,659

Fuel Taxes 909,144

Tax Refunds and Credits (45,761)

Investment Income 817,933

Other Nonexchange Revenue -

Total Taxes and Other Nonexchange Revenue $ 10,747,853
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -78- CHAP TER 2

Note 19. Imputed Financing:

(1) In FY 2000, FAA recognized as imputed financing the amount of accrued pension and post-retirement

benefit expenses for current employees. The assets and liabilities associated with such benefits are the

responsibility of the administering agency, OPM.

(2) In FY 2000, amounts paid by the Judgment Fund in settlement of claims or court assessments against the

FAA were recognized as imputed financing.

Note 20. Prior Period Adjustments

Note 21. Statement of Budgetary Resources Disclosures

The statement accurately represents the agency’s status of budgetary resources for FY 2000 and was largely

prepared from the budgetary accounts in the DAFIS trial balance. Because DAFIS is not standard gen eral

ledger compliant, some line items required on the statement were derived from the equivalent DAFIS

proprietary accounts rather than the specified budgetary accounts or from the SF-132, Apportionment and

Reapportionment Schedule, and the SF-133, Report on Budget Execution. In the Budgetary Resources section,

Budget Authority and Unobligated Balances - Beginning of Period are derived from budgetary financial

documents. In the Status of Budgetary Resource section, Unobligated Balances Available and Not Available are 

also derived from budgetary financial documents. Spending authority from offsetting collections are derived

from budgetary accounts and the SF-132. In the Outlays section, Obligations Incurred and Obligated Balances

are derived from budgetary and proprietary accounts. The budgetary resource documents used to support the

line items, e.g., the SF-132 are certified by FAA and approved by OMB. The outlays and other budgetary

balances are reconciled with Treasury and OMB monthly, quarterly, and annually.

(Dollars in Thousands)

Office of Person nel Management $ 330,870 (1)

Dept. of Justice Judgment Fund 83,340 (2)

Tot al Imputed Financin g $ 414,210

(Dollars in Thousands)

Airport Improvement Program -

Correct Grant Current Year Expenses $ 139,138

Correction of ARA Labor Production

Applied Overhead (64,893)

Correction of Explosive Detection

System to Property System (60,967)

Corrections to Unexpended

Appropriations 57,817

Reconciliation of General Ledger to

Property Systems 64,812

Reconciliation of Property Notin Use

General Ledger Acct 43,630

Other Adjustments Relating to

Property 24,235

Other 22,987

Total Prior Period Adjustment $ 226,759
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -79- CHAP TER 2

The net amount of budgetary resources obligated for undelivered orders at the end of FY 2000 was $5 billion.

The Aircraft Purchase Guarantee Program is funded under the authority to borrow from the U.S. Treasury

granted by Congress in the DOT and Related Agencies Appropriation Act, 1983. Borrowing authority is

implemented through a blanket promissory, which provides FAA with a line of credit for the full amount of

borrowing authority granted by Congress. Because authorization for issuing new loan guarantees expired in

1988, FAA has not issued any new guaranteed loans. 

Under Congressional legislation in FY 2000, FAA was authorized $ 1.95 billion in contract authority and

liquidating authority for $ 1.75 billion, which are derived from the Airport and Airway Trust Fund and available

until expended, for the Grants-in-Aid Programs. The contract authority available at the end of FY 2000 was

$65 thousand.

Congress mandated permanent indefinite appropriations for the Facilities and Equipment, Grants-in-Aid, and

Research, Development and Engineering to fully fund special projects that were ongoing and spanned several

years. 

FAA does not have any material differences between the information reported on the statement and the

amounts described as FY 2000 “actual” in the Budget of the United States Government for FY 2002. As of the

date of the financial statement, the budget has not been passed into law and is still draft. However, no change to

the FY 2000 actual amount is anticipated. 

Unobligated balances of budgetary resources for unexpired accounts are available in subsequent years until

expiration upon receipt of an apportionment from OMB. Unobligated balances of expired accounts are not

available. 

FAA incurred several adjustments to their budgetary resources in FY 2000. The Facilities & Equipment Fund

was reduced by $40.5 million and Grants-in-Aid for Airports was reduced by $54 million.

The Statement of Budgetary Resources is a combining statement and, as such, intraentity transactions have not 

been eliminated.

Note 22. Financing Sources Yet to be Provided

The Statement of Financing is a combining statement and, as such, intraentity transactions have not been

eliminated. The recognized liabilities not covered by budgetary resources equal the total financing sources yet

to be provided.

(Dollars in Thousands)

Decreases:

Other Accrued Liabilities $ 21,332

Federal Employee Compensation Act (FECA Actuarial) 21,136

Contingent Liabilities Sick Leave/Return Rights 7,219

Capital Leases 1,339

Financing Sources That Fund Costs of Prior Periods $ 51,026

Increases

Accrued Other Liabilites $ 56,763

Environmental Liability 499,776

Federal Employee Compensation Act (FECA Actual) 4,152

Contingent Liabilities for Legal Claims 67,013

Total Financing Sources Yet to be provided. $ 627,704
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -80- CHAP TER 2

Note 23. Custodial Activity

Note 24. Other Disclosures

Contract Negotiations. FAA had a total of $88.9 million in commitments (funds reserved for possible future

obligations) under unexpired Facilities and Equipment, and Research, Engineering and Development

appropriations. The commitments were for purchases of goods and services for which contract negotiations have

not been completed (i.e., agency obligations had not been incurred) at the end of FY 2000.

Contract Options. As of September 30, 2000, FAA had $13.1 billion in unobligated contracts. The terms of

these contracts give FAA the unilateral right to purchase additional equipment or services or to extend the

contract terms. Exercising this right would require the obligation of funds in future years.

Letter of Intent. FAA has authority under 49 U.S.C. 47110(e) to issue letter of intent (LOI) to enter into AIP

grant obligations; but LOIs do not create obligations. FAA has issued LOIs covering FY 1988 through FY 2010 in 

the aggregate amount of $3.2 billion. FAA had obligated $2 billion of this total amount from FY 1988 through

FY 2000, leaving $1.2 billion unobligated as of September 30,2000. FAA anticipates obligating $191 million of

this total amount in FY 2001.

AIP Grants. The FY 2000 AIP grant authority totaled $1.85 billion, including over $965 million in entitlements 

to specific locations. Of this amount the sponsors have claimed $868 million in entitlements. This amount will

be available from unused or newly enacted contract authority to those sponsors through FY2001 or 2002 in the

case of non hub primary airport locations. 

Aviation Insurance Program. FAA is authorized to issue hull and liability insurance under the Aviation

Insurance Program for air carrier operations where commercial insurance is not available on reasonable terms

where the operation to be insured is necessary to carry out the U. S. Government’s foreign policy. No claims for

losses were pending as of September 30,2000.

FAA may issue (1) premium insurance, for which a risk-based premium is charged to the air carrier, and (2)

non-premium insurance. FAA maintains standby non-premium war-risk insurance policies for 48 air carriers

having approximately 1,050 aircraft available for Defense or State Department charter operations. No coverage 

was extended during 2000.

FAA normally insures only a small number of air carrier operations at any time and establishes a maximum

liability for losing one aircraft. In many cases, that maximum liability for both hull loss and liability is

$1.75 billion; but it is usually less, and because FAA can use its regulatory authority to stop flights to high-risk

areas, and/or terminate insurance coverage, the range of possible liability to FAA in any year is assumed to be

(Dollars in Thousands)

Revenue Activity:

Sources of Cash Collections:

Tax Revenues $ -

Miscellaneous 21,942

Total Cash Collections 21,942

Accrual Adjustments (+/-) 1,811

Total Custodial Revenue $ 23,753

Disposition of Collections:

Transferred to Treasury General Fund $ 21,942

Increase (Decrease in Amounts Yet to be Transferred) 1,811

Refunds and Other Payments -

Retained by the Reporting Entity 0

Net Custodial Revenue Activity $ -
FY 2000 FAA ANNUAL REPORT

FI NAN CIAL STATE MENT -81- CHAP TER 2

between zero and $3.5 billion. Since the inception of the program (including the predecessor Aviation War Risk

Insurance Program dating back to 1951) only four claims ranging between $626 and $122,469 have been paid.

Other Legal Claims. FAA normally processes their legal claims through traditional judicial and

administrative forums; however there are certain claims; e.g., EEO cases and contract disputes, that are under

the alternative dispute resolution program, which are resolved using consensual dispute resolution techniques

such as mediation and neutral evaluation. In FY 2000, FAA had identified $5.4 million for these cases.
FY 2000 FAA ANNUAL REPORT

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U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

Stewardship Investment

Non Federal Physical Property

Airport Improvement Program

For the Fiscal Year Ended September 30, 2000

(Dollars in Thousands)

State/Territory FY 1998 FY 1999 FY2000

Alabama $ 15,556 $ 18,134 $ 19,653

Alaska 77,949 70,802 51,788

Arizona 47,243 53,135 58,381

Arkansas 19,291 21,694 17,534

California 101,897 106,161 87,617

Colorado 44,768 43,452 29,860

Connecticut 1,348 4,971 1,788

Delaware 284 197 2,515

District of Columbia 206 54 83

Florida 60,752 71,746 64,694

Georgia 41,604 43,556 43,911

Hawaii 7,142 12,131 6,567

Idaho 12,532 15,578 13,106

Illinois 74,514 63,596 66,003

Indiana 21,213 27,467 24,141

Iowa 16,983 30,450 16,169

Kansas 11,250 7,451 7,378

Kentucky 43,116 32,741 26,205

Louisiana 20,338 24,442 29,200

Maine 5,505 4,943 3,828

Maryland 9,765 18,136 14,900

Massachusetts 22,615 15,259 14,560

Michigan 47,890 50,995 27,363

Minnesota 23,430 27,902 30,561

Mississippi 9,788 14,393 9,281

Missouri 35,996 30,089 35,137

Montana 13,367 16,727 13,157

Nebraska 13,015 14,240 8,534

Nevada 30,420 22,981 32,106

New Hampshire 11,743 8,789 8,582

New Jersey 9,918 25,906 10,012

New Mexico 5,327 10,149 7,671

New York 67,664 86,754 57,671

North Carolina 31,226 50,572 26,084

North Dakota 10,980 8,263 11,490

Ohio 33,843 46,374 45,691

Oklahoma 5,240 14,949 8,678

Oregon 17,682 16,138 9,847

Pennsylvania 63,025 57,544 34,011
FY 2000 FAA ANNUAL REPORT

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U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

Stewardship Investment

Non Federal Physical Property

Airport Improvement Program

For the Fiscal Year Ended September 30, 2000

(Dollarsin Thousands)

State/Territory FY 1998 FY 1999 FY2000

Rhode Island 2,692 10,813 11,705

South Carolina 15,419 22,926 11,792

South Dakota 10,112 8,893 12,301

Tennessee 34,885 36,477 39,237

Texas 98,154 103,308 111,585

Utah 12,910 8,808 14,328

Vermont 5,219 4,141 1,157

Virginia 21,733 31,069 41,109

Washington 18,405 44,454 35,498

West Virginia 19,564 12,592 7,400

Wisconsin 30,406 25,512 26,278

Wyoming 9,337 7,871 14,972

American Samoa 1,329 676 241

Guam 1,260 10,341 3,399

Northern Mariana Island 3,272 4,027 1,610

Puerto Rico 10,482 7,163 9,179

Trust Territory of Pacific 479 27 138

Virgin Islands 2,384 9,231 2,411

Administration 52,075 75,680 55,196

Grand Total....................... $ 1,436,541 1,612,867 1,375,293

STEWARDSHIP INVESTMENT

Non-Federal Physical Property.

Airport Improvement Program. FAA makes project grants for airport planning and

development under the Airport Improvement Program (AIP) to maintain a safe and

efficient nationwide system of public-use airports that meets both present and future

needs of civil aeronautics. FAA works to improve the infrastructure of the Nation's

airports, in cooperation with airport authorities, local and state governments, and

metropolitan planning authorities.
FY 2000 FAA ANNUAL REPORT

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U.S. Department Of Transportation

Federal Aviation Administration

Stewardship Investment

Research and Development

For the Fiscal Year Ended September 30, 2000

(Dollars in Thousands)

Expenditures 1998 1999 2000

Applied Research $ 103,274 $ 118,834 $ 99,777

Development 48,237 18,358 7,175

R&D Plant 11,254 14,290 12,800

Administration 54,179 36,466 46,219

Total $ 216,944 $ 187,948 $ 165,971

Stewardship Investment

Research and Development.

Research. FAA conducts research and provides the essential air traffic control infrastructure

to meet increasing demands for higher levels of system safety, security, capacity, and efficiency.

Research priorities includes aircraft structures and materials; fire and cabin safety;

crash injury-protection; explosive detection systems; improved in-flight icing and ground

de-icing operations; better tools to predict and warn of weather hazards, turbulence, and

wake vortices; aviation medicine, and human factors.

NOTE: The numbers in FY 99 as reported above are based on the actual numbers,

they differ from the numbers reported in FY 1999, which were based on estimates.
FY 2000 FAA ANNUAL REPORT

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U.S. Department Of Transportation

FEDERAL AVIATION ADMINISTRATION

Supplementary Information

Intragovernmental Transactions

For the Fiscal Year Ended September 30, 2000

(Dollars in Thousands)

Intragovernmental Assets

Agency

Fund Balance

with Treasury

Accounts

Receivable Investments Other

Department of the Treasury $ 886,325 $ 226,265 $ 13,355,134 $

Department of Agriculture 12

Department of Commerce 1,130

Department of the Interior 1,372

Department of Justice 544

Department of Labor 5

Department of State 3,925

Department of the Army 45

Department of the Navy 729

General Services Administration 42

Department of the Air Force 6,443 7,742

Fed. Emergency Mgmt. Agcy. 46

National Aeronautics & Space Adm 3,991

Department of Energy 362

Department of Education 20

Department of Defense 3,692

Department of Transportation 6948

Other Agencies 11,867 37,288

Total $ 886,325 $ 267,438 $ 13,355,134 $ 45,030

Intragovernmental Liabilities

Agency

Accounts

Payables

Debt

Borrowings

from Other

Agencies Environmental Other

Other Agencies $ 130,245 $ $ 453,936 $ 115,904

Department of the Treasury 26

Department of Labor 192,015

Office of Personnel Management 36,645

Total $ 130,245 $ 26 $ 453,936 $ 344,564
FY 2000 FAA ANNUAL REPORT

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Intragovernmental Expenses and Revenues

Agency Expenses Revenues

Department of the Treasury $ 7,449 $ 7,449

Deparment of Agriculture 112 112

Department of Commerce 516 516

Department of the Interior 139 139

Department of Justice 84,110 771

Department of Labor 20 20

Department of Labor - FECA ** 84,364

Department of Navy 9,633 9,633

Office of Personnel Management** 937,826

Department of the Army 476 476

Veterans Administration 90 90

General Services Administration 69 69

Department of the Air Force 16,418 16,418

Fed. Emergency Mgmt. Agcy. 601 601

Health & Human Services 112 112

National Aeronautics & Space Adm 3,470 3,470

Department of Defense 437 437

Department of Transportation 16,350 16,350

Other Agencies 172,430

28,149

Total Expenses $ 1,334,622 $ 84,811

** Unfunded Expenses not associated with revenue

Intragovernmental Non-Exchange Revenue

Transfers-In Transfers-Out

Department of Commerce $ 39 $ 15

Department of the Treasury 136 20

Department of Health and Human Services 343

Office of the Secretary of Defense - Defense Agencies 51 5,221

Department of Interior 31

Department of Navy 41

Department of Army 6,498

Social Security Administration 21

General Services Administration 1,555

Department of the Air Force 1,972

Department of Housing and Urban Development 16

Department of Justice 11

Other Agencies 625 10,247

$ 1,194 $ 25,648

(Dollarsin Thousands)

U.S. Department Of Transportation

FEDERAL AVIATION ADMINISTRATION

Supplementary Information

Intragovernmental Transactions

For the Fiscal Year Ended September 30, 2000
FY 2000 FAA ANNUAL REPORT

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U.S. Department Of Transportation

FEDERAL AVIATION ADMINISTRATION

Supplementary Information

Deferred Maintenance

For the Fiscal Year Ended September 30, 2000

(Dollars in Thousands)

Asset Costs to Return to

Category Method Condition* Acceptable Condition

FY 1998 FY 1999 FY 2000

Land - - - (1)

Buildings Condition Assessment Survey 4&5 $ 18,214 $ 17,539 $ 30,971

Other Structures and Facilities Condition Assessment Survey 4&5 1,231 37,442 59,290

Aircraft and Aircraft Engines - - - (2)

National Airspace System

(NAS) Equipment - - - (3)

General Purpose Equipment - - - (4)

Assets Under Capital Lease - - -

Total $ 19,445 $ 54,981 $ 90,261

* Condition Rating Scale:

1: Excellent 2: Good

3: Fair 4: Poor

5: Very Poor

Information on FAA’s deferred maintenance is based on condition assessment survey (annual inspection).

Standards (orders) are provided for evaluating the fixed assets condition. These standards are combined with

FAA’s technicians’ knowledge, past experiences, and judgment to provide the following:

* Minimum and desirable condition descriptions

* Suggested maintenance schedules

* Standard costs for maintenance actions

* Standardized condition codes

There have not been material changes in the standards in recent years. FAA recognizes maintenance expense

as incurred. However, maintenance was insufficient during the past several years and resulted in deferred maintenance

on Buildings and Other Structures and Facilities.

(1) No material maintenance was deferred on land.

(2) Maintenance was not deferred on the FAA aircraft. The aircraft maintenance was ensured through

the aircraft maintenance, inspection, preventive maintenance, and alteration programs of the Flight

Inspection Maintenance Division programs.

(3) The FAA did not defer maintenance on NAS equipment. The maintenance of the Airway Facilities (AF)

systems, subsystems, and equipment in the NAS is guided by the general principle of ensuring availability

and reliability of air traffic control, navigation, and communication services. In order to minimize the quantity

and duration of service interruption and outages, both planned and unplanned, AF does not generally

defer the maintenance of the electronic equipment. Various reasons may cause a maintenance cycle to be

skipped, but the maintenance is performed during the next cycle. FAA Order 6000.30 states the minimum

standards for reliability and availability of NAS equipment. AF’s following initiatives ensure the highest

possible levels of performance of NAS equipment:

* Periodic and preventive maintenance programs

* Maintenance of backup equipment for key services in case of equipment interruption or missed maintenance

* Competent technical maintenance staff

(4) The amount recorded as FAA’s general purpose equipment was not material; therefore, no material

maintenance was deferred on these equipment.
FY 2000 FAA ANNUAL REPORT

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U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

SUPPLEMENTARY STATEMENT OF BUDGETARY RESOURCES

AS OF SEPTEMBER 30, 2000

(Dollars in Thousands)

Airport & Airway Trust Fund Trust Fund Trust Fund

Trust Fund Grants-in-Aid Facilities & Research, Eng. &

Corpus to Airports Equipment Development

BUDGETARY RESOURCES

Budget Authority $ (2,070,700) $ 2,799,474 $ 2,075,000 $ 156,495

Unobligated Balances - Beginning

of Period 12,516,610 - 454,575 14,542

Spending Authority From

Offsetting Collections - 64,283 3,252

Adjustments - (840,553) (9,716) 9,283

Total Budgetary Resources $ 10,445,910 $ 1,958,921 $ 2,584,142 $ 183,572

STATUS OF BUDGETARY RESOURCES

Obligations Incurred $ 37 $ 1,958,856 2,301,292 $ 167,706

Unobligated Balances-Available 10,445,873 65 239,801 13,412

Unobligated Balances-Not Available - - 43,049 2,454

Total Status of Budgetary Resources $ 10,445,910 $ 1,958,921 $ 2,584,142 $ 183,572

OUTLAYS

Obligations Incurred $ 37 $ 1,958,856 $ 2,301,292 $ 167,706

Less: Spending Authority From Offsetting

Collections and Adjustments - (63,282) (136,132) (12,536)

Obligated Balance, Net Beginning of Period - 2,882,220 1,531,327 154,355

Obligated Balance Transferred, Net - - - -

Less: Obligated Balance, Net - End of Period - (3,199,772) (1,619,747) (143,554)

Total Outlays $ 37 $ 1,578,022 $ 2,076,740 $ 165,971
FY 2000 FAA ANNUAL REPORT

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U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

SUPPLEMENTARY STATEMENT OF BUDGETARY RESOURCES

AS OF SEPTEMBER 30, 2000

(Dollars in Thousands)

Aviation

Insurance Franchise Other Combining

Revolving Fund Operations Funds Total

$ - $ - $ 5,975,000 $ - $ 8,935,269

75,429 985 93,403 54 13,155,599

4,008 31,426 82,952 - 185,921

22 71 (22,281) 2 (863,173)

$ 79,459 $ 32,482 $ 6,129,074 $ 56 $ 21,413,616

$ 249 $ 29,684 $ 6,019,967 $ - $ 10,477,792

78,190 2,727 46,076 54 10,826,198

1,020 71 63,031 2 109,627

$ 79,459 $ 32,482 $ 6,129,074 $ 56 $ 21,413,616

$ 249 $ 29,684 $ 6,019,967 $ - $ 10,477,792

(4,030) (31,496) (108,433) (2) (355,911)

141 5,214 644,124 118 5,217,499

- - - - -

(149) (4,943) (824,022) (111) (5,792,299)

$ (3,789) $ (1,541) $ 5,731,636 $ 5 $ 9,547,081
FY 2000 FAA ANNUAL REPORT

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Assets

Intragovernmental

Fund Balance with Treasury $ 8,967

Accounts Receivable, Net 447

Other (Note 5) 10

Total Intragovernmental Assets $ 9,424

Accounts Receivable, Net $ 1

General Property, Plant, and Equipment, Net 2,014

Total Assets $ 11,439

Liabilities

Intragovernmental Liabilities:

Accounts Payable $ (238)

Other Intragovernmental Liabilities 1,542

Total Intragovernmental Liabilities $ 1,304

Accounts Payable $ 3,859

Other Liabilities 1,812

Total Liabilities $ 6,975

Net Position Balances:

Cumulative Results of Operations $ 4,464

Total Net Position $ 4,464

Total Liabilities and Net Position $ 11,439

As of September 30, 2000

(Dollars in Thousands)

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

FRANCHISE FUND

BALANCE SHEET
FY 2000 FAA ANNUAL REPORT

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U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

FRANCHISE FUND

STATEMENT OF NET COST

For the Fiscal Year Ended September 30, 2000

(Dollars in Thousands)

Costs:

Programs

Intragovernmental $ 32,209

Less Earned Revenues (31,231)

Net Program Costs $ 978

Net Cost Of Operations $ 978
FY 2000 FAA ANNUAL REPORT

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Net Cost of Operations $ (978)

Financing Sources

Imputed Financing 599

Transfers-In 219

Total Financing Sources $ 818

Net Results of Operations $ (160)

Prior Period Adjustments 31

Net Change in Cumulative Results of Operations (129)

Change in Net Position (129)

Net Position Beginning of Period 4,594

Net Position End of Period $ 4,464

For the Fiscal Year Ended September 30, 2000

(Dollars in Thousands)

U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

FRANCHISE FUND

STATEMENT OF CHANGES IN NET POSITION
FY 2000 FAA ANNUAL REPORT

RE QUIRED SUP PLE MEN TARY IN FOR MA TION -93- CHAP TER 2

Assets

Intragovernmental

Fund Balance with Treasury $ 140

Investments 75,932

Total Intragovernmental Assets $ 76,072

Total Assets $ 76,072

Liabilities

Other Intragovernmental Liabilities 5

Total Intragovernmental Liabilities $ 5

Accounts Payable $ 4

Other Liabilities 21

Total Liabilities $ 30

Net Position Balances:

Cumulative Results of Operations 76,042

Total Net Position $ 76,042

Total Liabilities and Net Position $ 76,072

As of September 30, 2000

(Dollars in Thousands)

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

AVIATION INSURANCE REVOLVING FUND

BALANCE SHEET
FY 2000 FAA ANNUAL REPORT

RE QUIRED SUP PLE MEN TARY IN FOR MA TION -94- CHAP TER 2

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

AVIATION INSURANCE REVOLVING FUND

STATEMENT OF NET COST

For the year ended September 30, 2000

(Dollarsin Thousands)

Costs:

Programs

Public $ 219

Less Earned Revenues (4,009)

Net Program Costs $ (3,790)

Net Cost of Operations $ (3,790)
FY 2000 FAA ANNUAL REPORT

RE QUIRED SUP PLE MEN TARY IN FOR MA TION -95- CHAP TER 2

Net Cost of Operations $ 3,790

Financing Sources

Imputed Financing 10

Net Results of Operations 3,800

Prior Period Adjustments (9)

Net Change in Cumulative Results of Operations 3,791

Change in Net Position 3,791

Net Position Beginning of Period 72,251

Net Position End of Period $ 76,042

For the year ended September 30, 2000

(Dollars in Thousands)

U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

AVIATION INSURANCE REVOLVING FUND

STATEMENT OF CHANGES IN NET POSITION
FY 2000 FAA ANNUAL REPORT

RE QUIRED SUP PLE MEN TARY IN FOR MA TION -96- CHAP TER 1

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RE QUIRED SUP PLE MEN TARY 

IN FOR MA TION

ADMINISTRATIVE SERVICES FRANCHISE

FUND

Background/Fund Establishment

The franchise concept is designed to create

competition within the public sector for the

performance of a variety of support services. This

allows for the establishment of an environment to

maximize the use of internal resources through the

consolidation and joint-use of like functions and to

gain the efficiencies and economies of scale associated

with the competitive offering of services to other

Government agencies.

The Government Management Reform Act (GMRA) of 

1994, Public Law 103-356, provided for the

establishment of six franchise fund pilot programs. 

The six pilots were authorized by the President’s

Chief Financial Officers (CFO) Council prior to

submission of the FAA Franchise Fund proposal. 

However, the CFO Council’s Franchise Fund Working 

Group strongly endorsed the FAA proposal and

recommended submission to Congress as a

franchise-like operation. This endorsement resulted

in Congressional approval, and the Administrative

Services Franchise Fund was established in FY 1997.

Services

The Administrative Services Franchise Fund offers a

wide variety of services. These include international

training, accounting, payroll, travel, duplicating,

multimedia, information technology, and

management training. 

The customer base for Franchise fund services

includes DOT and non-DOT Government agencies. 

Benefits/Accomplishments

The objective of the franchise program is to enhance

the support provided to the core programmatic

mission of FAA. Benefits from the franchise

environment occur incrementally over time through

efficiencies and economies of scale associated with

development of partnerships and consolidation of like

functions plus the addition of new customers. 

Activities within the Administrative Services

Franchise Fund have identified a number of

advantages, benefits, and results from participation

in the fund. The franchise has been the catalyst for

management initiatives relating to improved

business practices that have resulted in the following

general impacts/benefits:

• A more business-like orientation

• Customer-driven decisions

• Emphasis on the cost of doing business and the full

recovery of costs

• Reduction in the delivery price of some products

and/or services

• Flexibility of the revolving fund environment

• Use of retained earnings to build a base for

equipment upgrades, improved services, etc.

• Renewed employee enthusiasm and the sense of

challenge

• Development and refinement of specific measurement

processes

• Identification of partnering and/or consolidation

opportunities

Specific accomplishments include:

• Centralized/consolidated the international training

activities at the FAA Academy at no additional cost.

• Increased FAA influence on global aviation system

and improvement of overall safety through

advancement of the international training program.

• Increased the number of international training

students by 27 percent in FY 2000, and increased

the number of international resident training

courses by 30 percent.

• Established an international training carryover

reserve to supplement operating income during

periods of variable cash flow.

• Used the international training revolving fund

carryover provision to: create an Air Traffic

simulation lab for international students, establish 

a generic computer training interface to allow

development of country-specific or generic

airspace, develop two new Air Traffic courses and

one Aviation Security course, and renovate a

dedicated classroom for international courses.

• Shortened turnaround time for routine printing

jobs from 10 to 4 days

• Purchased equipment upgrades in printing and

FY 2000 FAA ANNUAL REPORT

RE QUIRED SUP PLE MEN TARY IN FOR MA TION -97- CHAP TER 2
multimedia to improve technology, increase

capability, and replace wornout units through use

of the retained earnings provisions of the revolving

fund. This resulted in improved service delivery

and would not have been possible using the annual

appropriation cycle alone.

• Achieved a cost avoidance of approximately

$700,000 in FY 2000 from lower in-house

impression costs in the print shop.

• Maintained an 8 percent reduction in printing

impression costs implemented in FY 1999 resulting 

from efficiencies gained through new technology

and economies of scale associated with new

customers and increased product output.

• Centralized permanent change of station (PCS)

processing for all of FAA resulting in a cost

avoidance of approximately $100,000, increased

customer satisfaction, improved travel voucher

processing time, and reduced overall staffing large

as a result of providing travel services to multiple

DOT customers.

• Reduced payroll account cost by streamlined

processing procedures allowing consolidation of a

larger number of accounts per pay technician.

Enhanced the FAA’s clean financial statement

posture through support actions relating to expansion 

of the franchise to include the FAA Logistics Center.

FY 2000 FAA ANNUAL REPORT

RE QUIRED SUP PLE MEN TARY IN FOR MA TION -98- CHAP TER 2
GLOSSARY of ACRONYMS

A

AATF Airport and Airway Trust Fund

AC advisory circular

AD advisory directive

ADS-B automatic dependent 

surveillance-broadcast

AF Airway Facilities

AIP Airport Improvement Program

AMASS airport movement area safety system

ANCA Airport Noise and Capacity Act

AOPA Aircraft Owners and Pilots Association

ARAC Aviation Rulemaking Advisory 

Committee

ARSR air route surveillance radar

ARTCC air route traffic control center

ASAP Aviation Safety Action Program

ASDE airport surface detection equipment

AT air traffic

ATC air traffic control

ATCSCC ATC system command center

ATCT airport traffic control tower

ATOS Air Transportation Oversight System

ATS Air Traffic Services

ATSRAC Aging Transport Systems Rulemaking 

Advisory Committee

C

CAEP Committee on Aviation Environmental 

Protection

CAS cost accounting system

CATS Capability and Architecture Tool Suite

CCLD core capability limited deployment

CDM collaborative decisionmaking

CFO Chief Financial Officer

CFR Code of Federal Regulations

CIP Aviation System Capital Investment 

Plan

CPDLC controller-pilot data link 

communications

CPM cost/performance management

CSRS Civil Service Retirement System

CY calendar year

D

DAFIS Departmental Accounting and 

Financial Information System

DOD Department of Defense

DOL Department of Labor

DOT Department of Transportation

DP departure procedures

DP/STAR departure procedures/standard 

terminal arrival route

DSR display system replacement

E

EDS explosives detection system

EEO Equal Employment Opportunity

ETD explosives trace detectors

F

F&E Facilities and Equipment

FAA Federal Aviation Administration

FAR Federal Aviation Regulations

-99- GLOS SARY OF AC RO NYMS

FY 2000 FAA ANNUAL REPORT
FASAB Federal Accounting Standards 

Advisory Board

FAST final approach spacing tool

FECA Federal Employee’s Compensation Act

FERS Federal Employees Retirement System

FFP1 Free Flight Phase 1

FFP2 Free Flight Phase 2

FISDL flight information service data link

FOQA flight operations quality assurance

FRP Federal Radionavigation Plan

FSS flight service station

FY fiscal year

G

GA general aviation

GAAP Generally Accepted Accounting 

Principles

GAIN Global Aviation and Information 

Network

GAMA General Aviation Manufacturers 

Association

GAO General Accounting Office

GMRA Government Management Reform Act

GPS global positioning system

GSA General Services Administration

I

ICAO International Civil Aviation 

Organization

IFR Instrument Flight Rules

IRS Internal Revenue Service

ISIS integrated standby instrument system

L

LOB lines of business

LOI letter of intent

M

MAP Military Airports Program

MMAC Mike Monroney Aeronautical Center

N

NAS National Airspace System

NASA National Aeronautics and Space 

Administration

NATCA National Air Traffic Controllers 

Association

NOCC National Operations Control Center

NPIAS National Plan of Integrated Airport 

Systems

NPRM Notice of Proposed Rulemaking

NRP North American Route Program

NTAP National Track Analysis Program

NTSB National Transportation Safety Board

NWS National Weather Service

O

OEDP operation error detection patch

OIG Office of the Inspector General, 

Department of Transportation

OMB Office of Management and Budget

OPM Office of Personnel Management

OST Office of the Secretary of 

Transportation

-100- GLOS SARY OF AC RO NYMS

FY 2000 FAA ANNUAL REPORT
P

PCS permanent change of station

PFAST passive final approach spacing tool

PFC passenger facility charge

PP&E property, plant and equipment

Q

QAR quality assurance review process

R

R,E&D Research, Engineering and 

Development

RIAT runway incursion action team

RLV reusable launch vehicle

S

SFFAS Statement of Federal Financial 

Accounting Standards

SMA surface movement advisor

STAR standard terminal arrival route

STARS standard terminal automation 

replacement system

T

TAWS terrain awareness and warning system

TIP threat image projection

TMA traffic management advisor

TRACON terminal radar approach control

U

URET user request evaluation tool

USD utilization screening and disposal 

system

W

WJHTC William J. Hughes Technical Center

-101- GLOS SARY OF AC RO NYMS

FY 2000 FAA ANNUAL REPORT
FY 2000 FAA ANNUAL REPORT

-102-

(THIS PAGE IN TEN TION ALLY LEFT BLANK)
INDEX

A

Administrative Services Franchise Fund, 96-97

Aging Transport Systems RulemakingAdvisory 

Committee, 11-12

aircraft noise exposure, 28, 40

Aircraft Owners and Pilots Association safety 

education measures, 30

Airport Improvement Program grants-in-aid funding, 

17, 21, 23-25

airport movement area safety system, 14, 33

Airport Noise and Capacity Act, 40 airport surface 

detection equipment planned acquisition of, 14

air route surveillance radar, 15-16

Air Safety Foundation safety seminars, 30-31

air traffic control

aviation delay, 28, 36-37

flight route flexibility, 14, 15, 39

operational errors and deviations, 34

services, 13-14, 36-37

Air Traffic Control Systems Command Center role in 

reducing equipment delays, 36

Air Transportation Oversight System airline 

inspection, 10

automated dependent surveillance broadcast, 14, 17, 33

Aviation, Safety, and Capacity Expansion Act of 1990, 25

Aviation Safety Action Program implemented, 10

Aviation Safety Program, 30

B

Blueprint for NAS Modernization: An Overview of the 

National Airspace System ArchitectureVersion 4.0, 15, 23

C

Cap stone tech nol ogy to im prove sit u a tional

aware ness, 17

collaborative decision making tool flight route 

flexibility, 15

commercial space transportationFAA/NASA 

cooperative agreement, 18

licensing regulations, 18

reusable launch vehicles, 18

Committee on Aviation Environmental Protection

aircraft noise assessment, 40

controller-pilot data link communications, 14, 16

Cost/Performance Management program, 19, 41

D

deicing, 18

DELPHI accounting system transition to, 41

Departure Procedures/StandardTerminal Arrival 

Route flight route flexibility, 39

departure spacing program aviation delay mitigation, 14

display system replacement, 15

E

employee compensation. see FAA administration, 

compensation plan environmental safeguards, 18, 40

Equal Employment OpportunityNational EEO 

Mediation Program, 19

explosive device detection, 13, 28, 35

F

FAA administration audit, FY 2000, 19, 41

compensation plan, replaces GS grade levels, 19

Cost/Performance Management program, 19, 41

FAA Accountability Board, expanded scope, 19

FAA Management Advisory Council, 2, 19

FY 2000 FAA ANNUAL REPORT

-103- IN DEX
National EEO Mediation Program established, 19

organization chart, 4

overflight fees rule, 19

FAA Annual Performance Plan, 27-28

FAA mission statement, 7-8

FAA organization, 4, 8, 9

FAA publications

The Blueprint for NAS Modernization: An Overview 

of the National Airspace System Architecture

Version 4.0, 15, 23

general aviation safety advisory circulars, 31

Guide Specifications for DevicesUsed to Board 

AirlinePassengers with Mobility Impairments, 18

National Aviation Research Plan, 23

runway incursions, advisory circulars, 33

Wildlife Hazard Management at Airports, 18

FAA research and acquisitions. seeNAS modernization

FAA strategic plan, 7, 27-28. see also Safety; Security; 

System Efficiency

FAA websites

aviation delay, ww.fly.faa.gov, 14

collaborative decision making, www.fly.faa.gov/ois, 15

NAS Architecture Version 4.0, www.nas-architecture.faa.gov, 15

Federal Radionavigation Plan, 16

Figures and Tables

air carrier fatal accident rate, 29

air craft noise ex po sure, trends and per for mance 

mea sures, 40

aviation delays, trends and performance measures, 36

budget, FY 2000, 21

employment, percentages by lines of business, 9

FAA Administration, organization chart, 4

FAA headquarters and field organizations, 8

FAA Strategic Plan, goals and performance goals, 27-28

facilities and equipment, obligation trends, 23

flight route flexibility, trends and performance 

measures, 39

general aviation accident rate, 30

grants-in-aid for airports, obligation trends, 23

operational errors and deviations, trends and 

performance measures, 34

operations, obligation trends, 22

operations appropriation, by budget activity, 22

regional boundaries, 9

research, engineering and development, obligation 

trends, 23

runway incursions, trends and performance 

measures, 32

runway pavement condition,trends and

performance measures, 38

Financial Statement

statement of obligations incurred by appropriation 

and major object classification, 24

Financial Statements

aviation insurance revolving fund balance sheet, 93

statement of change in net position, 95

statement of net cost, 94

combined statement of financing, 60

combining statement of budgetary resources, 59

consolidated balance sheet, 56

 consolidated statement of changes in net position, 58

consolidated statement of net cost, 57

franchise fund balance sheet, 90

statement of change in net position, 92

statement of net cost, 91

OIG audit report, FY 2000, 46-54

OIG memorandum, FY 2000, 43-45

Stew ard ship In vest ment

re search and de vel op ment, 84

-104- IN DEX

FY 2000 FAA ANNUAL REPORT
Airport Improvement Program, non federal 

physical property, 82-83

supplementary information

deferred maintenance, 87

intra-governmental transactions, 85-86

supplementary statement of budgetary resources, 88-89

transition to DELPHI accounting system, 41

Financial Statements Notes

accounts receivable, 67-68

cash, foreign currency and other monetary assets, 69

custodial activity, 80

debt, 71

environmental and disposal liabilities, 71

federal employee and veterans benefits payable, 76

financing sources yet to be provided, 79

fund balances with Treasury, 66

imputed financing, 78

inventory and related property, 69-70

investments, 66-67

leases, 74-75

loans and loan guarantees, non-federal borrowers, 69

net cost by programs, 77

other assets, 68

other disclosures, 80-81

other liabilities, 72-73

prior period adjustments, 78

property, plant and equipment, net, 70

statement of budgetary resources disclosures, 78-79

summary of significant accounting policies, 61-65

taxes and other nonexchange revenue, 77

total cost and earned revenue by budget functional 

classification, 76-77

unexpended appropriations, 76

Flight Information Services Data Link, 11, 31

Flight Operational Quality Assurance program, 10

Foreign Airport Assessment Program,12

Free Flight. see System Efficiency, flight route flexibility

G

General Aviation Manufacturers Association

safety education, runway incursions, 30

Global Aviation Information Network World 

Conference, 13

Global Positioning System

Federal Radionavigation Plan, 16

 runway incursions, 14, 17, 33

I

International Civil Aviation Organization

aircraft noise assessment, 40

M

management report, of Chief Financial Officer, 41-42

Military Airport Program, 18

N

NAS Architecture Version 4.0 modernization plan, 15, 23

NAS modernization

air route surveillance radar, 15-16

controller-pilot data link communications, 14, 16

display system replacement, 15

Federal Radionavigation Plan, 16

Potomac TRACON, 16

Safe Flight 21 technologies,16-17

standard terminal automation replacement system, 16

National Aviation Research Plan, 23

-105- IN DEX

FY 2000 FAA ANNUAL REPORT
National EEO Mediation Program, 19

National Operations Control Center delay mitigation, 36

National Pavement Test Facility completion of, 38

National Plan of Integrated Airport Systems, 23-25, 38

National Track Analysis Programdetecting operational 

errors, 34

North American Route Program flight route flexibility, 39

P

Passenger Facility Charge Program

as source of capital funding, 25

Wendell H. Ford Aviation Investment and Reform 

Act, 1-2, 17-18

passive final approach spacing tool, 15

pavement maintenance pilot program, 38

pavement test facility completion of, 38

Potomac TRACON, 16

Q

Quality Assurance Review process controller performance, 34

R

reusable launch vehicles commercial space 

transportation, 18

Runway Incursion Action Teams, 33

runway incursions. see Safety, runway incursions

runway pavement conditions, 28, 38

S

Safe Flight 21 situational awareness technologies, 16-17

Safer Skies Agenda, 7, 10, 29, 30

Safety

aging transport systems, 11-12

air carrier fatal accident rate, 7, 27, 29

Safer Skies Agenda, 7, 10, 29, 30

Aircraft Owners and Pilots Association safety 

education measures, 31

airline ramps, 18

Air Safety Foundation seminars, 30-31

Air Transportation Oversight System, 10

Aviation Safety Action Program, implemented, 10

Aviation Safety Program, 30

Boeing 737 rudder initiatives,10-11

Capstone technology, situational awareness, 17

defibrillator proposal, 12

deicing, 18

FAA publications, advisory circulars, 31

flame propagation, new standard,11

Flight Information Service Data Link, 11, 31

fuel tanks, 11

GE CF6 engine inspection schedule, 11

general aviation fatal accidents, 27, 30-31

General Aviation Manufacturers Association safety 

education, runway incursions, 30

Global Aviation Information Network World Conference, 13

insulation blanket replacement,11

operational errors and deviations controller 

recertification changes, 34

 error detection improvements, 34

Flight Operational Quality Assurance program, 10

as performance goal, 27

Quality Assurance Review process, 34

terrain awareness and warning system, 10

runway and taxiway lighting, 18

runway incursions

airport movement area safetysystem, 14, 33

airport surface detection equipment, 14

-106- IN DEX

FY 2000 FAA ANNUAL REPORT
automated dependent surveillance broadcast, 14, 17, 33

FAA publications, advisory circulars, 33

General Aviation Manufacturers Association education 

measures, 30

Global Positioning System, 14, 17, 33

National Summit on, 14

Now Strategies, 33

reduction of, as performance goal, 27

Runway Incursion Action Teams, 33

Runway Safety Program, 32-33

Safe Flight 21 situational awareness technologies, 16-17

thermal acoustic insulation regulations, 11

wiring practices guidelines adopted, 12

Security, 12-13, 35

certification of screening companies, 12

civil aviation security consortia, 13

dangerous goods inspections, 13

explosive detection, 13, 28, 35

Foreign Airport Assessment Program, 12

of information systems, 13

Office of System Safety and GAIN initiative, 13

threat image projection, 12

Separation safety rules, standards, error detection, 34

standard terminal automation Replacement System, 16

surface movement advisor tool, 15

System Efficiency

aircraft noise exposure

Airport Noise and Capacity Act, 40

Committee on Aviation Environmental Protection, 40

Airport Improvement Program grants-in-aid, 17, 21, 23-25

aviation delay

departure spacing program, 14

National Operations Control Center, established, 36

Spring/Summer 2000 Plan, 1, 14

volume vs weather delays, 36

weather prediction and flight routing, 36-37

flight route flexibility

collaborative decision making tool, 15, 36

controller-pilot data link communications, 15, 16

Departure Procedures/Standard terminal arrival 

route program, 39

Free Flight Phase 1 and 2, 1, 14-15

North American Route Program, 39

passive final approach spacing tool, 15

as performance goal, 28

preferred route elimination, 39

surface movement advisor tool, 15

traffic management advisor tool, 15

user request evaluation tool, 14-15

runway pavement conditions

National Pavement Test Facility completed, 38

Pavement Maintenance Pilot Program, 38

T

terrain awareness and warning system, 10

threat image projection, 12

traffic management advisor tool, 15

U

User Request Evaluation Tool core capabilities 

limited deployment, 14-15

W

wildlife hazard management FAA publication, 18

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FY 2000 FAA ANNUAL REPORT
 

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